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provided under section 72(t)(2). She has not done so. Thus, the
10-percent additional tax under section 72(t) applies to the
distribution petitioner received from her IRA in 2002.
We accordingly sustain respondent’s determination in the
deficiency notice that petitioners are liable for the $97,789
additional tax under section 72(t) for 2002.
II. Accuracy-Related Penalty
We turn now to respondent’s determination that petitioners
are liable for the accuracy-related penalty under section
6662(a). Respondent has the burden of production under section
7491(c) and must come forward with sufficient evidence that it is
appropriate to impose the penalty. See Higbee v. Commissioner,
116 T.C. 438, 446-447 (2001).
Respondent determined that petitioners are liable for the
accuracy-related penalty for a substantial understatement of
income tax under section 6662(b)(2) for 2002. There is a
substantial understatement of income tax if the amount of the
understatement exceeds the greater of either 10 percent of the
tax required to be shown on the return, or $5,000. Sec.
6662(d)(1)(A); sec. 1.6662-4(b), Income Tax Regs.
Petitioners understated their income tax for 2002 by
$97,789,5 which is greater than $5,000 or 10 percent of the tax
required to be shown on their return. Respondent has therefore
met his burden of production with respect to petitioners’
substantial understatement of income tax.
5The difference between the required tax of $364,125 and the
$266,336 tax reported on the return is $97,789.
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