- 32 -
of the tuition, including the fee for Mishna classes, they paid
to Emek or Yeshiva Rav Isacsohn in 1995.18
B. Whether Petitioners Are Liable for the Accuracy-Related
Penalty
Respondent contends that petitioners are liable for the
accuracy-related penalty under section 6662 for deducting $15,000
of their tuition. We disagree.
Taking into account respondent’s concession, petitioners’
tax understatement is $3,209. That amount is not substantial for
purposes of section 6662 because it does not exceed the greater
of 10 percent of the amount required to be shown or $5,000. See
sec. 6662(d)(1)(A).
Respondent contends that petitioners knew that they lacked a
reasonable basis for claiming the disallowed deductions because,
unlike the return they filed for 1994, petitioners did not file a
Form 8275 or otherwise call attention to the deduction. We
disagree. Respondent permitted similar deductions for
petitioners’ 1991, 1992, and 1993 tax returns.
Petitioners timely filed their 1995 return on October 15,
1996. Petitioners’ 1994 return was being audited when they filed
their 1995 return pursuant to an extension on October 15, 1996.
Petitioners filed their petition in Sklar I on January 27, 1997.
18 In light of our conclusion, we need not decide whether
petitioners complied with substantiation requirements imposed by
sec. 170(f)(8).
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011