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income tax, (2) gross valuation misstatement(s),
or (3) negligence or disregarded rules or regula-
tions. There has not been a showing by the part-
nership or any of its partners that there was a
reasonable cause for any of the resulting under-
payments, that the partnership or any of its part-
ners acted in good faith, or that any other excep-
tions to the penalty apply. It is therefore de-
termined that, at a minimum, the accuracy-related
penalty under Section 6662(a) of the Internal
Revenue Code applies to all underpayments of tax
attributable to adjustments of partnership items
of Evergreen Trading, LLC. The penalty shall be
imposed on the components of underpayment as fol-
lows:
A. a 40 percent penalty shall be imposed on
the portion of any underpayment attribut-
able to the gross valuation misstatement as
provided by Sections 6662(a), 6662(b)(3),
6662(e), and 6662(h) of the Internal Reve-
nue Code.
B. a 20 percent penalty shall be imposed on
the portion of the underpayment attribut-
able to negligence or disregard of rules
and regulations as provided by Sections
6662(a), 6662(b)(1), 6662(c) of the Inter-
nal Revenue Code.
C. a 20 percent penalty shall be imposed on
the underpayment attributable to the sub-
stantial understatement of income tax as
provided by sections 6662(a), 6662(b)(2),
and 6662(d) of the Internal Revenue Code.
D. a 20 percent penalty shall be imposed on
the underpayment attributable to the sub-
stantial valuation misstatement as provided
by Sections 6662(a), 6662(b)(3), and
6662(e) of the Internal Revenue Code.
[Reproduced literally.]
On September 26, 2005, respondent issued respective notices
of deficiency to petitioners in these cases for the taxable years
1999 and 2000. In those respective notices, respondent made the
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