Kenneth Frank Diller - Page 15




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               Addition to Tax Under Section 6654                                     
               Section 6654 imposes an addition to tax for failure to make            
          timely and sufficient payments for estimated taxes.  In order for           
          respondent to satisfy his burden of production under section                
          7491(c), he must produce evidence necessary to enable the Court             
          to conclude that petitioner had an obligation to make an                    
          estimated tax payment.  Wheeler v. Commissioner, 127 T.C. 200,              
          211 (2006).  Specifically, respondent must produce evidence                 
          showing that petitioner had a “required annual payment” as                  
          defined by section 6654(d)(1)(B) for the year at issue.  Id.                
               The section 6654 addition to tax is calculated with                    
          reference to four required installment payments of the taxpayer’s           
          estimated tax liability.  Sec. 6654(c)(1).  Each required                   
          installment of estimated tax is equal to 25 percent of the                  
          “required annual payment”.  Sec. 6654(d)(1)(A).                             
               Under section 6654(d)(1)(B), “required annual payment” means           
          the lesser of--                                                             
                    (i) 90 percent of the tax shown on the return                     
                    for the taxable year (or, if no return is                         
                    filed, 90 percent of the tax for such year),                      
                    or                                                                
                    (ii) 100 percent of the tax shown on the                          
                    return of the individual for the preceding                        
                    taxable year.                                                     
               Clause (ii) shall not apply if the preceding taxable                   
               year was not a taxable year of 12 months or if the                     
               individual did not file a return for such preceding                    
               taxable year.                                                          







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