Shannon D. Mullins - Page 14

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          Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).  As such, we               
          sustain respondent’s determination that petitioner is liable for            
          an addition to tax under section 6651(a)(1), and we conclude that           
          the amount of the addition should be computed based upon a filing           
          date of November 2, 2002.                                                   
               2.  Accuracy-related Penalty Under Section 6662                        
               Section 6662(a) provides that a taxpayer may be liable for a           
          penalty of 20 percent of the portion of an underpayment of tax              
          attributable to (1) a substantial understatement of tax or (2)              
          negligence or disregard of rules or regulations.  Sec. 6662(a)              
          and (b)(1) and (2).  The accuracy-related penalty does not apply            
          to any portion of an underpayment of tax if it is shown that                
          there was reasonable cause for such portion and that the taxpayer           
          acted in good faith.  Sec. 6664(c)(1).                                      
               An “understatement of 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) and (2).                                 
               “Negligence” is defined as any failure to make a reasonable            
          attempt to comply with the provisions of the Internal Revenue               
          Code.  Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.                  
          Generally, a taxpayer is negligent if he or she fails to make a             
          reasonable attempt to ascertain the correctness of a deduction,             
          credit, or exclusion on a tax return that would seem to a                   
          reasonable and prudent person to be “too good to be true”.  Sec.            

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