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OPINION
A. Accuracy-Related Penalty
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, negligence, or disregard of rules or regulations. Sec.
6662(a) and (b)(1) and (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 if there is a reasonable basis for the tax
treatment of the items at issue by the taxpayer. Sec.
6662(d)(2)(B). The accuracy-related penalty does not apply to
any part of an underpayment for which there was 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.
B. Whether Respondent Met the Burden of Producing Evidence
Showing That Petitioners Are Liable for the Accuracy-Related
Penalty
Petitioners contend that respondent did not meet the burden
under section 7491(c) of producing evidence showing that they are
liable for the accuracy-related penalty for 1997 and 1998. We
disagree.
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Last modified: May 25, 2011