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examination for purposes of establishing the date on which the
Commissioner started his examination as to the affected items at
issue. According to respondent, the affected items were
determined “in connection with” the examination of TBS 90-1 and,
hence, the date on which that examination began is the date that
is used to test whether section 7491(c) applies to this case.
According to petitioner, the Commissioner’s determination of the
affected items resulted from a separate, nonpartnership-level
examination of petitioners personally and, hence, the starting
date of the later examination is the date to be used to determine
the applicability of section 7491(c).
Notwithstanding which party bears the burden of production
in this case, our review of the record leads us to the same
conclusion; i.e., that petitioners are liable for the section
6662(h) accuracy-related penalty for 1992 as determined by
respondent. Accordingly, we need not and do not discuss any
further the parties’ dispute as to which of them bears the burden
of production in this case. See McDonough v. Commissioner, T.C.
Memo. 2007-101.
2. Overview of Sections 6662(h) and 6664
Section 6662(h) provides that a taxpayer may be liable for a
40-percent penalty on any portion of an underpayment of tax
attributable to gross valuation misstatements. No penalty is
imposed under that section, however, unless the portion exceeds
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Last modified: November 10, 2007