Patrick G. & Valerie V. O'Malley - Page 49




                                        - 49 -                                         
          transaction as a sale in their 1999 return.                                  
               Based upon our examination of the entire record before us,              
          we find that petitioners have failed to carry their burden of                
          establishing that they are not liable for 1999 for the accuracy-             
          related penalty under section 6662(a) because of a substantial               
          understatement of tax under section 6662(b)(2).40                            
               We now address respondent’s determination in the notice that            
          petitioners are liable for 2000 for the accuracy-related penalty             
          under section 6662(a).  We have found that petitioners have                  
          sustained their burden of establishing by strong proof that                  
          respondent erred in determining that the June 14, 2000 transac-              
          tion constitutes a sale of lot 12 for $225,000.  Consequently,               
          there is no underpayment of tax for 2000 on which the accuracy-              
          related penalty under section 6662(a) may be imposed.  On the                
          record before us, we find that petitioners are not liable for                
          2000 for the accuracy-related penalty.                                       
               We have considered all of the contentions and arguments of              
          the parties that are not discussed herein, and we find them to be            
          without merit, irrelevant, and/or moot.                                      




               40In light of our finding under sec. 6662(a) and (b)(2), we             
          need not address respondent’s argument that petitioners are                  
          liable for 1999 for the accuracy-related penalty under sec.                  
          6662(a) because of negligence or disregard of rules or regula-               
          tions under sec. 6662(b)(1).                                                 






Page:  Previous  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  Next 

Last modified: November 10, 2007