Walter and Susan Moore - Page 31




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          petitioner did not sell any shares of CTI she obtained through              
          the March 5, 2002, exercise of stock options.  See Merlo v.                 
          Commissioner, T.C. Memo. 2005-178.  While petitioner might have             
          violated CTI’s insider trading policy had she sold her CTI stock            
          to a third party upon receiving it, the possibility of such a               
          violation does not create a substantial risk of forfeiture within           
          the meaning of section 83.  See United States v. Tuff, supra at             
          1255-1256.                                                                  
          D.  Accuracy-Related Penalty                                                
               Respondent determined that petitioners are liable for an               
          accuracy-related penalty under section 6662(a) and (b)(2) for a             
          substantial understatement of income tax.  In part, section                 
          6662(a) and (b)(2) imposes a 20-percent accuracy-related penalty            
          for any portion of an underpayment that is attributable to a                
          substantial understatement of income tax.  An “understatement” is           
          the excess of the amount of tax required to be shown on the                 
          return for the taxable year over the amount of tax imposed that             
          is shown on the return, reduced by any rebate.  Sec. 6662(d)(2).            
          A substantial understatement of income tax exists for any taxable           
          year for purposes of section 6662 if the amount of the                      
          understatement for the taxable year exceeds the greater of 10               
          percent of the tax required to be shown on the return for the               
          taxable year or, in the case of an individual, $5,000.  Sec.                
          6662(d)(1)(A).                                                              







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