- 17 -
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the underpayment to which section 6662 applies.
Section 6662 applies to the portion of any underpayment which is
attributable to (1) negligence or disregard of rules or regula-
tions, sec. 6662(b)(1), or (2) a substantial understatement of
tax, sec. 6662(b)(2).
It is respondent’s position that petitioner’s underpayment
for her taxable year 2001 was attributable to (1) negligence or
disregard of rules or regulations and (2) a substantial under-
statement of tax. We shall address only whether petitioner’s
underpayment for 2001 was attributable to a substantial under-
statement of tax. That is because our resolution of that ques-
tion is determinative of whether petitioner is liable for the
accuracy-related penalty under section 6662(a).11
For purposes of section 6662(b)(2), an understatement is
equal to the excess of the amount of tax required to be shown in
the tax return over the amount of tax shown in such return,
sec. 6662(d)(2)(A), and is substantial in the case of an individ-
ual if the amount of the understatement for the taxable year
exceeds the greater of 10 percent of the tax required to be shown
in the return for that taxable year or $5,000, sec.
6662(d)(1)(A). The amount of the understatement is to be reduced
by that portion of the understatement which is attributable to
11See supra note 10.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011