- 13 -
Revenue Code, and “disregard” means any careless, reckless or
intentional disregard. Sec. 6662(c). An underpayment is not
subject to the penalty for negligence or for disregard of rules
and regulations to the extent that the taxpayer shows that the
underpayment is due to reasonable cause or good faith.
Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43, 98
(2000), affd. 299 F.3d 221 (3d Cir. 2002); see also secs. 1.6662-
3(a), 1.6664-4(a), Income Tax Regs. A substantial understatement
of tax is an understatement that exceeds the greater of 10
percent of the tax required to be shown on the tax return or
$5,000. Sec. 6662(d)(1)(A).
Without including the $160,400 in income, petitioner
reported a tax due of $829, whereas respondent determined a tax
due of $65,575 and a Federal income tax deficiency of $64,746.
Petitioner understated her income tax for 2001 in an amount
greater than $5,000 or 10 percent of the tax required to be shown
on the return. Respondent has, therefore, met his burden of
production with respect to petitioner’s substantial
understatement of income tax.
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for the taxpayer’s position and that the
taxpayer acted in good faith with respect to that portion. Sec.
6664(c)(1); sec. 1.6664-4(b), Income Tax Regs. Accordingly, we
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: March 27, 2008