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IV. Penalties
A. Section 6662
With respect to examinations beginning after July 22, 1998,
the Commissioner bears the burden of production in any court
proceeding involving an individual’s liability for penalties or
additions to tax. Sec. 7491(c). To meet this burden, the
Commissioner must come forward with sufficient evidence
indicating that it is appropriate to impose the relevant penalty
or addition to tax. Higbee v. Commissioner, 116 T.C. 438, 446
(2001). In instances where an exception to the penalty or
addition to tax is afforded upon a showing of reasonable cause,
the taxpayer bears the burden of showing such cause. Id. at 447.
Section 6662(a) provides for an accuracy-related penalty in
the amount of 20 percent of the portion of an underpayment
attributable to (among other things): (1) Any negligence or
disregard of the rules or regulations or (2) any substantial
17(...continued)
petitioner had $33,569.51 of self-employment income.
Petitioner’s Form 1040, Schedule C reported 16,365 of income, and
respondent made an adjustment of $17,543.51 to Form 1040,
Schedule C income. Petitioner’s reported self-employment income
($16,365) combined with respondent’s adjustment ($17,543.51)
total $33,908.51. After subtracting Form 1040, Schedule C taxes
and licenses of $472 as allowed by respondent, there remains a
difference of $133, which was the amount of loss reported on
petitioner’s 1999 Form 1040, Schedule C. However, because the
$70,000 Krismon Buttes payment is also self-employment income,
the Court concludes that respondent has shown at least $33,569.51
of self-employment income for 1999.
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