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would be served by permitting the late amendment. Respondent’s
motion for leave to file an amended answer will be denied.
Section 6662(a) Accuracy-Related Penalties
Respondent determined accuracy-related penalties under
section 6662 for negligence or intentional disregard of rules and
regulations and for a substantial understatement of income tax on
petitioner’s income tax returns for 1995 through 1999. Under
section 6662(a), a taxpayer may be liable for a penalty of
20 percent on the portion of an underpayment of tax due to
(1) negligence or intentional disregard of rules and regulations
or (2) any substantial understatement of income tax. Sec.
6662(b)(1) and (2). Section 6662(c) defines “negligence” as
including any failure to make a reasonable attempt to comply with
the provisions of the Internal Revenue Code and defines
“disregard” as any careless, reckless, or intentional disregard.
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 defined as the excess of the tax required to
be shown on the return over the tax actually shown on the return,
less any rebate. Sec. 6662(d)(2)(A). However, the amount of the
understatement may be “reduced by that portion of the
understatement which is attributable to * * * the tax treatment
of any item by the taxpayer if there is or was substantial
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