- 15 - shown by the greater of 10 percent of the tax required to be shown or $5,000. Sec. 6662(d)(1)(A). The Commissioner has the burden of production under section 7491(c) with respect to the liability of any individual for a penalty imposed by the Internal Revenue Code and must come forward with sufficient evidence indicating that it is appropriate to impose the penalty. See Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001). Once the Commissioner meets his burden of production, the taxpayer must come forward with persuasive evidence that the Commissioner's determination as to the penalties is incorrect or that the taxpayer had reasonable cause or substantial authority for his position. See id. at 447; sec. 1.6664-4, Income Tax Regs. We have sustained respondent's determination of a $73,374 increase in petitioner's taxable wages for tax year 2002.9 In petitioners' circumstances, the omission10 would produce an understatement exceeding the greater of $5,000 or 10 percent of the tax required to be shown on their return. Accordingly, 9 Petitioners' reporting of the proceeds from the stock option transactions as capital gains did not offset this omission, as the capital gains claimed with respect to the stock option transactions were absorbed by petitioners' reported capital losses in excess of $300,000. 10 Petitioners have also conceded that they were not entitled to a $7,000 deduction claimed with respect to an IRA contribution. Petitioners have offered no argument to the effect that the portion of the underpayment attributable to this item is due to reasonable cause or any other mitigating factor.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011