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Under section 6662(d)(2)(B)(i), the amount of a tax
understatement may be reduced by the portion thereof that is
attributable to the tax treatment of an item for which there was
substantial authority. We find that given the unusual
circumstances of this case, petitioners’ underreporting of Mr.
Rusten’s self-employment tax was due to reasonable cause.
Therefore, the penalty under section 6662 is not applicable.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: March 27, 2008