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petitioners reported zero income tax on their 2000 Federal income
tax return. Because $91,763 exceeds $5,000 and 10 percent of the
amount required to have been shown on petitioners’ return, we
conclude that respondent has produced sufficient evidence to
demonstrate that the underpayment is attributable to a
substantial understatement and that an accuracy-related penalty
is appropriate. See sec. 6662(d)(1)(A).
In the petition, petitioners contended that no penalty
should be imposed because (1) “there was absolute full
disclosure”, (2) petitioners acted in good faith, and (3) any
understatement was due to reasonable cause. However, petitioners
made no contentions and produced no evidence opposing the section
6662(a) accuracy-related penalty at trial or on brief. See Rules
142(a), 149(b); Burris v. Commissioner, T.C. Memo. 2001-49.
Consequently, petitioners have failed to persuade the Court that
respondent’s determination with respect to the accuracy-related
penalty was incorrect. Accordingly, we hold that petitioners are
liable for a section 6662(a) accuracy-related penalty for
substantial understatement of tax.
We have considered all of the contentions that the parties
have raised. To the extent not addressed herein, those
contentions are without merit or unnecessary to reach.
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