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For 1989, a taxpayer is liable for an accuracy-related
penalty in the amount of 20 percent of any part of an
underpayment attributable to, among other things, a substantial
understatement of income tax. Sec. 6662(a) and (b)(2). The
amount of the understatement is reduced by amounts attributable
to items (1) for which there was substantial authority for the
taxpayer's position, or (2) adequately disclosed on the
taxpayer’s return or in a statement attached to the return. Sec.
6662(d)(2)(B). The accuracy-related penalty does not apply to
any part of an underpayment for which was a reasonable cause and
with respect to which the taxpayer acted in good faith. Sec.
6664(c)(1); sec. 1.6664-4(a), Income Tax Regs.
Respondent contends that petitioner is liable for the
addition to tax under section 6661(a) for 1988 and the accuracy-
related penalty under section 6662(a) for 1989 for substantial
understatement of tax. We disagree. Petitioner attached a
statement (which he titled a “rider”) to his 1986 amended return.
Disclosure is adequate under section 6661(b)(2)(B)(ii) if, inter
alia, it is made on a statement that includes a caption
identifying the statement as disclosure under section 6661. Sec.
1.6661-4(b) and (c), Income Tax Regs. The statement and the
return were sufficient to apprise respondent that the deduction
was for an expropriation loss, its amount, and the potential
controversy. Petitioner did not refer to section 6661 on his
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