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failure to timely file under section 6651(a)(1) in 1997, 1998,
1999, 2000, and 2001, in amounts to be determined under Rule 155
calculations.
2. Section 6662
Section 6662 imposes an accuracy-related penalty upon any
underpayment of tax resulting from a substantial understatement
of income tax. The penalty is equal to 20 percent of any
underpayment that constitutes a substantial understatement of
income tax. Sec. 6662(a). The term “substantial understatement”
is defined as the greater of: (1) 10 percent of the tax required
to be shown on the return for the taxable year, or (2) $5,000.
Sec. 6662(d). Petitioner reported tax on his income tax returns
and respondent determined deficiencies based upon corrected tax
resulting in understatements of the following amounts:
Tax year Tax on return Corrected tax Understatement
1998 $979 $11,645 $10,666
1999 96 9,356 9,260
2000 156 9,209 9,053
2001 -0- 7,323 7,247
In this case, the amount of the understatement for each of
the years 1998, 1999, 2000, and 2001 is more than 10 percent of
the tax required to be shown and greater than $5,000. Thus,
petitioner substantially understated his income tax for 1998,
1999, 2000, and 2001. Thus, respondent has met the burden of
production, and petitioner, having failed to show reasonable
cause, substantial authority, or other basis for reducing the
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