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In response to the notice of deficiency, petitioner filed
his petition with this Court on August 2, 2001.
In an amendment to answer filed May 18, 2005, respondent
asserted that, in the alternative to the 40-percent penalties
under section 6662(h), petitioner is liable for 20-percent
accuracy-related penalties under either section 6662(b)(1) or
(2).
OPINION
A. Accuracy-Related Penalties in General
Under section 6662(a), a taxpayer may be liable for a 20-
percent penalty on the portion of an underpayment of tax
attributable to negligence or disregard of rules or regulations
or to a substantial underpayment of tax. Sec. 6662(a) and (b)(1)
and (2). The section 6662(a) penalty is increased to 40-percent
when the underpayment of tax is the result of “gross valuation
misstatements”. Sec. 6662(h)(1). However, no penalty is imposed
under section 6662 if there is reasonable cause for the
underpayment of tax and the taxpayer has acted in good faith.
Sec. 6664(c)(1).
B. Burden of Proof
Generally, a taxpayer bears the burden of proving the
Commissioner’s determinations incorrect. Rule 142(a)(1); Welch
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