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10 percent of the tax required to be shown on the return.
Therefore, there was a substantial understatement of tax under
section 6662(d)(1). Petitioners received a Form 1099 for 2001
and failed to include that income on their 2001 income tax
return. Because the requirements for relief from the section
6662 substantial understatement penalty have not been met and
petitioners have not given any reasonable cause for failing to
report the income, petitioners are liable for the
accuracy-related penalty under section 6662.9
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.
9Because it is clear that there was a substantial
understatement of tax on the 2001 return, it is not necessary for
the Court to determine whether petitioners were negligent in not
reporting the commission income for that year.
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Last modified: May 25, 2011