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account. Moreover, the mailing address on the August 2000
monthly statement was the same as petitioners’ current mailing
address.
On the one hand, Mr. De Shon testified at trial that he had
no knowledge of this account, but, on the other hand, he
testified that he had no knowledge of a lot of paperwork in Mrs.
De Shon’s possession. Mr. De Shon’s conflicting testimony leads
to an inference that petitioners, either jointly or separately,
in fact maintained account 879.
On the basis of the record, we conclude that petitioners
received discharge of indebtedness income from account 879 of
$3,617 in 2001. Accordingly, we sustain respondent’s
determination on this issue.
B. Section 6662(a) Penalty
In the notice of deficiency, respondent determined that
petitioners are liable under section 6662(a) for an underpayment
of tax that is attributable to substantial understatement of
income tax.
Section 6662(a) imposes a penalty equal to 20 percent of any
underpayment of tax that is attributable to substantial
understatement of income tax. See sec. 6662(a) and (b)(2). An
understatement of income tax is “substantial” if it exceeds the
greater of 10 percent of the tax required to be shown on the
return, or $5,000. Sec. 6662(d)(1)(A). An “understatement” is
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