Susan Bocock and Jack Carl Ryals - Page 9

                                        - 9 -                                         
          6211(a)(1)(B).  Accordingly, the payments in issue did not reduce           
          the deficiency in the instant case.                                         
               We do not have jurisdiction over the issue of whether                  
          respondent improperly credited the payments in issue because                
          respondent credited $10,406.63 to Mr. Ryals’s 1978 tax liability,           
          pursuant to section 6402(a), after petitioners reported an                  
          overpayment of $17,645 on their 2002 tax return.  This Court does           
          not have jurisdiction to review the credit made by the                      
          Commissioner pursuant to section 6402(a) in the instant case.               
          See sec. 6512(b)(4); Savage v. Commissioner, 112 T.C. 46, 49-51             
          (1999).6                                                                    
               Because our decision will include a section 6662(a) penalty,           
          we address whether the payments in issue reduce the underpayment            
          on which the penalty is imposed even though the parties did not             
          raise the issue.  In Woods v. Commissioner, 91 T.C. 88, 99                  
          (1988), we held that “withholding credits must be subtracted from           
          the ‘understatement’ to arrive at the ‘amount of any                        
          underpayment’” in computing the addition to tax under section               
          6661(a).7                                                                   
               After our decision in Woods, the Omnibus Budget                        
          Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721, 103 Stat.           

               6Cf. Smith v. Commissioner, 123 T.C. 15, 26 (2004), revd. on           
          other grounds 429 F.3d 533 (5th Cir. 2005).                                 
               7Former sec. 6661 provided an addition to tax for a                    
          substantial understatement of a liability.  The amount of the               
          addition to tax was 25 percent of the amount of any underpayment            
          attributable to such understatement.                                        



Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011