§6661

1990-4, they contend that this case is distinguishable from Licari because the facts and circumstances of this case make the retroactive application of the increased rate "so harsh and oppressive as to transgress constitutional limitations ." They rely primarily on the fact that more than 22 years passed between the filing of their 1983 tax return and the i

We nevertheless point out that, for the 5As a result of petitioners’ concessions and our findings, discussed below, we need not decide whether the tax shelter provisions are applicable in this case.

We hold that petitioner is liable for such additions.

We hold that petitioner is liable for such additions.

As noted, in the notice of deficiency issued on July 17, 1998, respondent determined that petitioners are liable for additions to tax for negligence pursuant to section 6653(a)(1) and (2) and for a substantial understatement addition to tax pursuant to section 6661.

In sum, we hold for petitioner on the issue of the recapture of the investment tax credit.

We have found that petitioner in these cases waited until he filed his reply brief to address his objections; accordingly, we hold that petitioner did not preserve his objections.5 The Plan Distribution 5 Despite our holding that petitioner’s objections were abandoned, we note that we did not rely on the statements contained in the declarations of Bruce A.

Section 6661 Addition to Tax Section 6661 provides for an addition to tax for the - 30 - substantial understatement of income tax.

We hold she may not.

Substantial Understatement Liabilities¹¹ Section 6661, as applicable for 1987 and 1988,¹² provides for a 25-percent addition to tax for substantial understatements of tax liability.

Hansberry, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Judge: Respondent determined the following deficiencies in and additions to petitioner's Federal income taxes: Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6653(b)(2) Sec. 6661 1980 $25,265 $16,983 $0 $0 1981 34,220 25,018 0 0 1982 21,196 10,598 1 5,299 1 50 percent of the statutory interest on $21,196. - 2 - All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule ref

section references are to the Internal Revenue Code, unless otherwise indicated. All Rule references are to the Tax Court Rules of Practice and Procedure. - 3 - Leon E. Richartz, docket No. 41987-85 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1979 $45,528 $2,276 --- 1980 296,373 14,819 --- 1981 879,244 43,962 --- 1982 871,014 43,551 $87,101 Leon E. Richartz, docket No. 25313-86 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1983 $67,501 $3,375 $6,750 Maria Rivera, doc

Section 6661 Robertson I also held petitioners liable for the addition to tax under section 6661 that was determined by respondent in the notice of deficiency. Petitioners bear the burden of proving that respondent's determination is wrong. See Rule 142(a). Section 6661(a) provides that, if there is a "substantial understatement of income tax", the

section references are to the Internal Revenue Code, unless otherwise indicated. All Rule references are to the Tax Court Rules of Practice and Procedure. - 3 - Leon E. Richartz, docket No. 41987-85 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1979 $45,528 $2,276 --- 1980 296,373 14,819 --- 1981 879,244 43,962 --- 1982 871,014 43,551 $87,101 Leon E. Richartz, docket No. 25313-86 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1983 $67,501 $3,375 $6,750 Maria Rivera, doc

section references are to the Internal Revenue Code, unless otherwise indicated. All Rule references are to the Tax Court Rules of Practice and Procedure. - 3 - Leon E. Richartz, docket No. 41987-85 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1979 $45,528 $2,276 --- 1980 296,373 14,819 --- 1981 879,244 43,962 --- 1982 871,014 43,551 $87,101 Leon E. Richartz, docket No. 25313-86 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1983 $67,501 $3,375 $6,750 Maria Rivera, doc

section references are to the Internal Revenue Code, unless otherwise indicated. All Rule references are to the Tax Court Rules of Practice and Procedure. - 3 - Leon E. Richartz, docket No. 41987-85 Additions to Tax Year Deficiency. Sec. 6653(a)(1) Sec. 6661 1979 $45,528 $2,276 --- 1980 296,373 14,819 --- 1981 879,244 43,962 --- 1982 871,014 43,551 $87,101 Leon E. Richartz, docket No. 25313-86 Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1983 $67,501 $3,375 $6,750 Maria Rivera, doc

, 45 F.3d 396 (10th Cir. 1995), revg. in part and remanding T.C. Memo. 1992- 740, supports their position. Petitioners' reliance on Fisher v. Commissioner, supra, is also misplaced. That case involved a request for a waiver of additions to tax under section 6661(c). Based on the record, the Court of Appeals found that the Commissioner had not issued a denial with respect to the request, but instead had issued a notice of deficiency. The Court of Appeals reasoned that this Court could not have de

Whether petitioner is liable for additions to tax for substantial understatement of income tax under section 6661 for fiscal years 1987 and 1988.

Addition to Tax Under Section 6661 - 28 - Respondent determined an addition to tax of $40,349 under section 6661 for taxable year ended July 31, 1989.

As an alternative to the fraud additions to tax and penalty for 1986 through 1989, respondent determined additions to tax for negligence or disregard of rules or regulations pursuant to sections 6653 (a) (1) (A) and (a) (1) (B) for - 29 - additions to tax for the substantial understatement of tax pursuant to section 6661 for 1986, 1987, and 1988, and an accuracy-rel·ated penalty pursuant to section 6662 for 1990.7 Mrs.

MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: Respondent determined deficiencies and additions to tax in petitioners' Federal income tax as follows: Reaves Livestock, Inc. Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(1)(A) Sec. 6661 1984 $39,374 $28,835 $14,418 1985 79,218 42,459 21,229 1986 95,420 $91,216 30,405 1987 85,092 74,947 24,982 Respondent also determined that Reaves Livestock, Inc. (Reaves Livestock) is liable for additions to tax for fraud of 50 percent of t

s otherwise indicated, all section references are to the Internal Revenue Code in effect for the year at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. -2- Additions to Tax Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $321 50 percent of $643 the interest due on $6,426 The issues for decision are: (1) Whether the notice of deficiency was issued after the period of limitations for the assessment and collection of taxes for petitioner's 1982 tax year exp

rs 1983 to 1987. We hold that they are. 5. Whether the statute of limitations bars assessment of tax for the years in issue. We hold that it does not. 6. Whether petitioners are liable for additions to tax for substantial understatement of tax under section 6661. We hold that they are for the years they substantially underpaid tax. -4- 7. Whether petitioners are liable for self-employment tax under section 1401 for the years in issue. We hold that they are. Section references are to the Internal

(6) Whether petitioners are liable for the addition to tax for substantial understatement of income tax under section 6661 3 for 1988 and the accuracy-related penalty for substantial understatement of income tax under section 6662(d) for 1989.

A. Pesavento, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: Respondent determined deficiencies in and additions to petitioners' 1988 Federal income tax as follows: - 2 - Additions to Tax Petitioners Deficiency Sec. 6653(a) Sec. 6661 Reginald and $33,380 $1,669 $8,345 Shannon Wise1 Henry Eicher2 9,909 495 2,477 On December 14, 1995, petitioner Henry Victor Eicher (Eicher) filed a Notice of Agreement to be Bound by the decision in the Wises' case. Most, but not all, of th

petitioner. William B. McCarthy, for respondent. MEMORANDUM OPINION PARR, Judge: Respondent determined deficiencies in, and additions to, petitioner's Federal income taxes as follows: Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1982 $9,668 $4,834 50% of the interest $2,417 due on $9,668 1983 22,915 11,458 50% of the interest 5,729 due on $22,915 1984 127,635 63,818 50% of the interest 31,112 due on $127,635 - 2 - All section references are to the Internal Revenue

MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: Respondent determined deficiencies and additions to tax in petitioners' Federal income tax as follows: Reaves Livestock, Inc. Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(1)(A) Sec. 6661 1984 $39,374 $28,835 $14,418 1985 79,218 42,459 21,229 1986 95,420 $91,216 30,405 1987 85,092 74,947 24,982 Respondent also determined that Reaves Livestock, Inc. (Reaves Livestock) is liable for additions to tax for fraud of 50 percent of t

3In the alternative to the section 6659 addition to tax, respondent determined an addition to tax under section 6661 for substantial understatement of liability.

Petitioners and the corporation argue that, to the extent that the threshold requirements of section 6661 are not met, the section 6661 addition to tax does not apply.

activity was not engaged in for profit. 1. Held: B’s yacht chartering activity was not engaged in for profit within the meaning of sec. 183, I.R.C. 2. Held, further, sec. 6653(a), I.R.C., addition to tax is not sustained against P. 3. Held, further, sec. 6661, I.R.C., addition to tax is sustained against P. James S. Kaplan, for petitioner. Moira L. Sullivan and Paul T. Muniz, for respondent. - 2 - MEMORANDUM FINDINGS OF FACT AND OPINION HALPERN, Judge: By notice of deficiency dated March 17, 199

The substantial understatement addition to tax under section 6661(b)(1) does not apply where a taxpayer discloses adequate facts on the tax return to disclose to respondent the nature of the item in question.

The substantial understatement addition to tax under section 6661(b)(1) does not apply where a taxpayer discloses adequate facts on the tax return to disclose to respondent the nature of the item in question.

The substantial understatement addition to tax under section 6661(b)(1) does not apply where a taxpayer discloses adequate facts on the tax return to disclose to respondent the nature of the item in question.

the amount of the underpayment attributable to negligence, $6,619. Respondent also determined that interest on deficiencies accruing after December 2 In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. 3 For taxable year 1982, the addition to tax for negligence in an amount equal to 50 percent of the interest due on the amount of the underpayment attributable to negligence was provided for unde

3 For 1982 respondent, in an amendment to answer, determined an addition to tax under section 6661 of $1,333.75 as an alternative to the addition to tax under section 6659 shown.

iscal 1987 of $222,879. In computing this tax, Alondra claimed deductions for rent, management fees, and wages that respondent disallowed. In light of our findings on these issues, Alondra's understatement of tax exceeds the threshold established by section 6661. Thus, Alondra made a substantial understatement within the meaning of section 6661(b). Petitioners argue, as they do for the negligence additions to tax, that they reasonably relied on competent professional advice. We reject this argum

iscal 1987 of $222,879. In computing this tax, Alondra claimed deductions for rent, management fees, and wages that respondent disallowed. In light of our findings on these issues, Alondra's understatement of tax exceeds the threshold established by section 6661. Thus, Alondra made a substantial understatement within the meaning of section 6661(b). Petitioners argue, as they do for the negligence additions to tax, that they reasonably relied on competent professional advice. We reject this argum

(2) Whether petitioner is liable for additions to tax for: (a) Negligence under section 6653(a) for 1989; (b) valuation overstatement under section 6659 for 1989; (c) substantial understatement under section 6661 in the alternative to section 6659 for 1989; and (d) an accuracy related penalty under section 6662(h) for gross valuation misstatement, or, in the alternative, under section 6662(a).

(10) Whether petitioners are liable for additions to tax for: (a) Negligence under section 6653(a) for 1987 and, in the alternative to fraud, for 1988 and the negligence penalty under section 6662 for 1989; (b) substantial understatement of income tax under section 6661 for 1987 and 1988; and (c) late filing under section 6651(a)(1) for 1987 and, in the alternative to fraud, for 1989.

l Judge: Respondent determined that petitioner was liable for the following additions to tax for taxable year 1982: $452.25 under section 6653(a)(1), 50 percent of the interest due on a $9,045 deficiency under section 6653(a)(2), and $2,261.25 under section 6661. Unless otherwise - 2 - indicated, section references are to the Internal Revenue Code in effect for the year in issue. The issues for decision are: (1) Whether petitioners are liable for additions to tax for negligence under section 665

(2) was not liable for an addition to tax for substantial understatement for 1986, because there was no substantial understatement of her income tax for that year, and (3) was liable, in recomputed amounts, for additions to tax for negligence under section 6653(a), for 1986 and 1987, and for an addition to tax for substantial understatement under section 6661 for 1987.

ntpenalty, stating: On the basis of its evaluation of the motives and experience of the [taxpayers], the tax courtdenied the penalties under sections 6653 and 6659. The tax court, however, found that the [taxpayers] were liable for the penalty under section 6661. We do not agree. If the [taxpayers] were acting as "an ordinary prudent person in the circumstances," then their reliance upon the investment advice of their accountant was "reasonable" and "in good faith under all the circumstances." S

.) - 14 - In a very short section of their brief, petitioners state without supporting argument that they are not liable for the section 6661 addition to tax .

Petitioner has not satisfied any of the conditions for avoiding application of the section 6661 addition to tax.

Respondent also determined that for 1985 and 1986 petitioner is liable for additions to tax under section 6661 for substantial understatements of tax.

MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: By notice of deficiency dated November 22, 1993, respondent determined a deficiency in petitioner’s Federal income tax of $673,145 for 1985, and additions to tax for fraud - 2 - under section 6653(b)(1) and (2) and for substantial understatement of tax under section 6661.1 Petitioner was convicted of various crimes related to bank loans he obtained and filing false tax returns for 1985 and 1986.

For 1982 through 1986, respondent determined deficiencies of $503,139, $443,704, $1,265,273, $2,939,540, and $215,003, respectively, and additions to tax pursuant to section 6661 of $125,785, $110,926, $316,318, $734,885, and $53,751, respectively.

did. (2) Whether petitioner, Mr. Hamilton, is liable for an addition to tax for fraud pursuant to section 6653(b)(1) for 1988.3 We hold he is. (3) Whether petitioners substantially understated their Federal income tax for 1988 within the meaning of section 6661. We hold they did. FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. Petitioners, Bill Fred Hamilton (Mr. Hamilton) and

Section 6661 provides for an addition to tax for substantial understatements reduced by the portion for which there is substantial authority or adequate disclosure. David’s understatements were not based on substantial authority or adequately disclosed, and, thus, David is liable for those additions to tax. See, e.g., Cluck v. Commissioner, 105 T.C

e count of criminal tax evasion for 1986 in violation of 26 U.S.C. sec. 7201 (2000). R determined a deficiency of $14,611, additions to tax for fraud pursuant to sec. 6653(b), I.R.C., and an addition to tax for substantial understatement pursuant to sec. 6661, I.R.C. On Feb. 10, 2003, R moved for summary judgment. Held: R’s motion for summary judgment is granted in full. Held, further, P is liable for a deficiency in the amount of $14,611 for 1986 based on his deemed admission. Held, further, P

On the basis of the foregoing, we sustain respondent’s deficiency determinations for 1987, 1988, 1989, and 1992, and his determinations regarding petitioner’s liability for the additions to tax pursuant to section 6661 for 1988 and sections 6651(a) and 6654(a) for 1992.

Section 6661 provides for an addition to tax for substantial understatements reduced by the portion for which there is substantial authority or adequate disclosure. David’s understatements were not based on substantial authority or adequately disclosed, and, thus, David is liable for those additions to tax. See, e.g., Cluck v. Commissioner, 105 T.C

determined the following deficiencies, additions to tax, and penalties in petitioners’ Federal income taxes: Docket No. 24410-95 Lucian T. Baldwin III and Teresa M. Baldwin: Accuracy- Additions to tax related penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $418,914 $20,946 $104,729 --- 1989 441,563 — --- $88,313 Docket No. 18739-95 Lucian T. Baldwin III: Accuracy- related penalty Year Deficiency Sec. 6662(a) 1990 $660,180 $132,036 1991 627,605 125,521 1992 331,541 66,308 All

termined deficiencies in petitioners’ Federal income tax and additions to tax as follows: 1 These cases were consolidated for trial, briefing, and opinion. - 2 - Domer L. Ishler Additions to tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $112,227 $84,170 1 $28,057 1988 396,659 297,494 -- 99,165 1 50 percent of the interest due on $112,227. 20th Century Marketing, Inc. Additions to tax Year ended Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 Dec. 31, $118,31

determined the following deficiencies, additions to tax, and penalties in petitioners’ Federal income taxes: Docket No. 24410-95 Lucian T. Baldwin III and Teresa M. Baldwin: Accuracy- Additions to tax related penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $418,914 $20,946 $104,729 --- 1989 441,563 — --- $88,313 Docket No. 18739-95 Lucian T. Baldwin III: Accuracy- related penalty Year Deficiency Sec. 6662(a) 1990 $660,180 $132,036 1991 627,605 125,521 1992 331,541 66,308 All

MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: Respondent determined deficiencies in petitioner's Federal income tax and additions to tax and penalties as follows: 137 *BERVED FEB 1 3 2002 - 2 - Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6661 Sec. 6654 1985 $296,275.88 ¹$155,784.40 $74,056.47 1986 389,855.00 ¹169,812.76 97,463.75 1987 387,838.00 2290,878.50 $119.43 ¹ Plus 50 percent of the interest due on the portion of the underpayment due to fraud under sec. 6653(b)(2) for 1985

the notice of deficiency mistakenly shows this amount as the sum of the additions to tax under sec. 6653(a)(1) and (2), i.e., $29,781. 3 The first page of the notice of deficiency mistakenly references sec. 6662(d), which section is the successor to sec. 6661 and is applicable for returns the due date for which (determined without regard to extensions) is after December 31, 1989. See Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721(a), (c)(2), (d), 103 Stat. 2395-2400. After

aim an increased addition to tax pursuant to sec. 6214(a). The increase, in the amount of $17,877, is purely computational in nature. 3 The first page of the notice of deficiency mistakenly references sec. 6662(d), which section is the successor to sec. 6661 and is applicable for returns the due date for which (determined without regard to extensions) is after December 31, 1989. See Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721(a), (c)(2), (d), 103 Stat. 2395-2400. After

ties as follows:1 1The fraud additions to tax pursuant to sec. 6653(b) for the taxable years 1987 and 1988, and the fraud penalty pursuant to (continued...) - 2 - Additions to Tax and Penalties Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $173,817 $130,363 1 $43,454 Sec. 6653(b)(1) Sec. 6661 1988 53,937 $40,453 $13,484 Sec. 6651(a)(1) Sec. 6663 1989 73,279 $13,792 $54,959 Sec. 6654 Sec. 6662(c) 1990 124,891 $8,057 $24,978 150 percent of the interest due on $173,817. After

nt we have determined there to be an underpayment of tax attributable to fraud, the addition to tax under sec. 6653(b)(1) (B), I.R.C., shall apply for 1987. 4. Held, further, Ps are liable for the addition to tax for substantial understatement under sec. 6661, I.R.C., for 1987 and 1988. ISERVED JUN 6 2001 i - 2 - Joseph A. DelVecchio and Carol DelVecchio, pro se. Leonard T. Provenzale, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION HALPERN, .Judge: By notice of deficiency dated January

For returns due before January 1, 1990, a taxpayer whose return contains a substantial understatement of income tax is liable for an addition to tax under section 6661 equal to 25 percent of the underpayment attributable to the understatement.

Whether petitioners are liable for additions to tax for substantial understatement of income tax under section 6661 for 1985 and 1987 and for accuracy-related penalties for substantial understatement of tax under section 6662(b)(2) and (d) for 1989 and 1990.

whether Jimmy and Sandra Morris (the Morrises) are liable for additions to tax pursuant to section 6661 for taxable years 1986 and 1987; and 8.

and determined that petitioner was a partner when the ranch was sold in 1988, that petitioner was required to report his distributive share of partnership income for 1988, and that petitioners were liable for additions to tax under section 6653 and section 6661. OPINION Petitioners make two arguments in an effort to avoid reporting and paying income tax on petitioner’s 1988 distributive share of partnership income. First, petitioners argue that, although the partnership operated the ranch from

enue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - due on $10,195. Respondent also determined an addition to tax of $2,548.75 for a substantial understatement of tax under section 6661. Petitioners did not contest and have conceded the addition to tax for a substantial understatement. The issue for decision is whether petitioners are liable for the additions to tax for negligence pursuant to section 6653(a)(1) and (2) wi

Substantial Understatements Section 6661 provides for a 25-percent addition to tax on any substantial understatement.

that his unreported income from that scheme was $172,019 and $49,296, respectively.2 1 Petitioner has not directed our attention to any evidence (and did not make any arguments on brief) as to respondent’s determination of the additions to tax under sec. 6661. We conclude that petitioner has conceded this issue, if, in fact, the Rule 155 computation shows that his income tax understatement is “substantial” within the meaning of sec. 6661(b)(1). See Rule 151(e)(4) and (5); see also Rule 142(a). 2

ly, respondent determined the following deficiencies in and additions to petitioners' Federal income taxes: Larry Whittington, docket No. 5208-96 Additions to tax Year Deficiency Sec. 6653(a)(1) Sec. 6653(a)(1)(A) Sec. 6653(a)(2) Sec. 6653(a)(1)(B) Sec. 6661 1985 $54,635 $2,732 -- 1 -- $13,659 1986 45,307 -- $2,265 -- 1 11,327 1987 48,182 -- 2,409 -- 1 12,046 1 50 percent of the statutory interest on the deficiency. Ray and Glynda Whittington, docket No. 11955-96 Additions to tax Year Deficiency

ly, respondent determined the following deficiencies in and additions to petitioners' Federal income taxes: Larry Whittington, docket No. 5208-96 Additions to tax Year Deficiency Sec. 6653(a)(1) Sec. 6653(a)(1)(A) Sec. 6653(a)(2) Sec. 6653(a)(1)(B) Sec. 6661 1985 $54,635 $2,732 -- 1 -- $13,659 1986 45,307 -- $2,265 -- 1 11,327 1987 48,182 -- 2,409 -- 1 12,046 1 50 percent of the statutory interest on the deficiency. Ray and Glynda Whittington, docket No. 11955-96 Additions to tax Year Deficiency

ing SERVED AUG 1 2 - 2 - from payments petitioner Jon L. Stolte¹ received under two disability policies. The resulting deficiencies in income tax, additions to tax, and penalties are as follows: Additions to Tax Penalty Year Deficiency Sec. 6653(a) Sec. 6661 Sec. 6662 1987 $12,472 $624 $3,118 1988 5,371 269 1,343 1989 6,274 $1,255 1990 6,263 1,253 After concessions by petitioners, the sole issue for decision is whether certain payments received by petitioner may be excluded from petitioners' gro

FACT AND OPINION VASQUEZ, Judge: In these consolidated cases, respondent determined the following deficiencies in and additions to - 2 - petitioners’1 Federal income taxes: Taxable Period Additions to Tax Petitioners Ending Deficiency Sec. 6653(b) Sec. 6661 Compact 03/31/85 $23,783 $11,892* $5,946 Equipment Co. 03/31/86 247,334 123,667* 61,834 05/31/86 33,609 16,805* 8,402 Bernard and 12/31/85 209,313 104,657* 52,328 Carol Atkinson 12/31/86 124,851 93,638* 31,213 * Plus 50 percent of interest d

hi, for respondent. - 2 - MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies in petitioner's Federal income taxes and additions to tax as follows: Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1983 $2,330,687 -- -- -- 1984 64,870,674 $3,243,534 50% of the $11,280,731 interest due on $45,122,925 Respondent also determined that petitioner is liable for increased interest pursuant to section 6621(c)1 on the portion of the 1984 defici

ent. MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Judge: Respondent determined the following deficiencies in and additions to petitioner's Federal income taxes: - 2 - Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1976 $263,353.75 $131,676.88 -- -- -- 1984 20,255.00 -- $10,113 1 $5,056 1985 244,848.00 -- -- -- -- 1987 24,986.00 -- -- -- -- 1 50 percent of the interest on $20,255. Respondent also determined that increased interest pursuant to section 6

Ended Deficiency 5/31/87 $7,404.90 David R. Peters and Diana L. Peters--Docket No. 20690-91 Tax Period Ended Deficiency 12/31/87 $572 12/31/88 833 John P. Parsons and Melba R. Parsons--Docket No. 20691-91 Additions to Tax Tax Period Ended Deficiency Sec. 6661 12/31/87 $11,028 $2,757 12/31/88 8,095 2,024 - 4 - Respondent subsequently conceded the additions to tax pursuant to section 6661 in docket No. 20691-91 for the 1987 and 1988 taxable years in the amounts of $2,757 and $2,024, respectively.

6661 1978 $1,161,317 $580,659 -- $37,226 -- 1979 1,246,774 623,387 -- 52,098 -- 1980 364,056 182,028 -- 23,197 -- 1981 464,416 232,208 -- 35,585 -- 1982 621,489 310,745 50% of the 60,604 $155,372 interest due on $621,489 1983 172,038 86,019 50% of the 10,317 43,010 interest due on $172,038 Docket No. 7127-92 Additions to Tax Penalty Year Defic

nt under section 6653(a)(1) and (2) for 1984 and 1985 and under section 6653(a)(1)(A) and (B) for 1986. 3. Whether LaVern Scherping and Loren Scherping are liable for the additions to tax for substantial understatement determined by respondent under section 6661. We hold for respondent on all issues. Section references are to the Internal Revenue Code in effect for the years in issue. Rule references are to the Tax Court Rules of Practice and Procedure. The term "petitioners" refers to LaVern Sc

ct for the year in issue. All Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Respondent determined additions to petitioners' Federal income tax as follows: Additions to Tax Tax Year Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661 1986 $303 1 $1,514 1 50 percent of the interest due on $6,054. The issues for decision are: (1) Whether petitioners are liable for the additions to tax for negligence under section 6653(a)(1)(A) and (B); and (2) whether petitioners are liabl

335.00 Victor I. Podd, docket Nos. 20226-93, 6211-94: Penalties Year Deficiency Sec. 6662(a) 1988 $951 - 1989 12,065 $2,413 1990 135,094 27,019 Victor T. Podd, docket Nos. 20227-93, 6210-94: Additions to Tax Penalties Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $48,402 $2,402 $12,101 - 1989 475,634 - - $95,127 1990 68,637 - - 13,727 Julia Podd, docket No. 6213-94: Penalties Year Deficiency Sec. 6662(a) 1990 $52,277 $10,455 Powertex, Inc., docket Nos. 20228-93, 6214-94: Tax Year A

335.00 Victor I. Podd, docket Nos. 20226-93, 6211-94: Penalties Year Deficiency Sec. 6662(a) 1988 $951 - 1989 12,065 $2,413 1990 135,094 27,019 Victor T. Podd, docket Nos. 20227-93, 6210-94: Additions to Tax Penalties Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $48,402 $2,402 $12,101 - 1989 475,634 - - $95,127 1990 68,637 - - 13,727 Julia Podd, docket No. 6213-94: Penalties Year Deficiency Sec. 6662(a) 1990 $52,277 $10,455 Powertex, Inc., docket Nos. 20228-93, 6214-94: Tax Year A

EMORANDUM FINDINGS OF FACT AND OPINION PARR, Judge: Respondent, in a notice of deficiency, determined against petitioner the following Federal income tax deficiencies, an addition to tax, and a penalty: Year Addition to Tax Penalty Ended Deficiency Sec. 6661 Sec. 6662 6/30/87 $48,610 $12,153 -- 6/30/90 210,354 -- $42,071 - 2 - All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unl

nt under section 6653(a)(1) and (2) for 1984 and 1985 and under section 6653(a)(1)(A) and (B) for 1986. 3. Whether LaVern Scherping and Loren Scherping are liable for the additions to tax for substantial understatement determined by respondent under section 6661. We hold for respondent on all issues. Section references are to the Internal Revenue Code in effect for the years in issue. Rule references are to the Tax Court Rules of Practice and Procedure. The term "petitioners" refers to LaVern Sc

ent for the years in issue; (c) petitioner is liable for additions to tax for fraud under section 6653(b)(1)(A) and (B) for 1987 and under section 6653(b) for 1988; (d) petitioner is liable for penalties for fraud under section 6663 for 1989 and 1990; and (e) petitioner is liable for additions to tax for substantially understating income tax under section 6661 for 1987 and 1988.

T AND OPINION WRIGHT, Judge: Respondent determined deficiencies in petitioners' Federal income taxes, an addition to tax for substantial understatement of tax and accuracy-related penalties, as follows: - 2 - Addition to Tax Penalty Year Deficiency Sec. 6661 Sec. 6662(a) 1988 $8,760 $2,190 --- 1989 2,423 --- $485 1990 7,532 --- 1,506 Petitioners have alleged and claimed in their petition that, based on their amended Federal income tax returns for 1988, 1989, and 1990, they are entitled to refund

yment decided for those years that was not due to fraud. Addition to Tax for a Substantial Understatement Respondent determined that petitioner is liable for additions to tax for substantial understatements for 1985, 1986, 1987, and 1988 pursuant to section 6661. An understatement is the difference between the amount required to be shown on the return and the amount actually shown on the return and is substantial if it exceeds the greater of (1) 10 percent of the tax required to be shown on the

- 7 - (6) Whether the Takaos are liable for an addition to tax for substantial underpayment of tax under section 6661 for 1988.

dent. MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined a deficiency in petitioners' 1987 Federal income tax and additions to tax as follows: Additions to Tax Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661 $308,201 $61,705.20 $146,064.61 50 percent of the $77,038.75 interest due on $308,201 - 2 - After concessions,1 the issues for decision are: (1) Whether petitioners are required to recognize and report gains resulting from their disposition

335.00 Victor I. Podd, docket Nos. 20226-93, 6211-94: Penalties Year Deficiency Sec. 6662(a) 1988 $951 - 1989 12,065 $2,413 1990 135,094 27,019 Victor T. Podd, docket Nos. 20227-93, 6210-94: Additions to Tax Penalties Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $48,402 $2,402 $12,101 - 1989 475,634 - - $95,127 1990 68,637 - - 13,727 Julia Podd, docket No. 6213-94: Penalties Year Deficiency Sec. 6662(a) 1990 $52,277 $10,455 Powertex, Inc., docket Nos. 20228-93, 6214-94: Tax Year A

335.00 Victor I. Podd, docket Nos. 20226-93, 6211-94: Penalties Year Deficiency Sec. 6662(a) 1988 $951 - 1989 12,065 $2,413 1990 135,094 27,019 Victor T. Podd, docket Nos. 20227-93, 6210-94: Additions to Tax Penalties Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $48,402 $2,402 $12,101 - 1989 475,634 - - $95,127 1990 68,637 - - 13,727 Julia Podd, docket No. 6213-94: Penalties Year Deficiency Sec. 6662(a) 1990 $52,277 $10,455 Powertex, Inc., docket Nos. 20228-93, 6214-94: Tax Year A

335.00 Victor I. Podd, docket Nos. 20226-93, 6211-94: Penalties Year Deficiency Sec. 6662(a) 1988 $951 - 1989 12,065 $2,413 1990 135,094 27,019 Victor T. Podd, docket Nos. 20227-93, 6210-94: Additions to Tax Penalties Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $48,402 $2,402 $12,101 - 1989 475,634 - - $95,127 1990 68,637 - - 13,727 Julia Podd, docket No. 6213-94: Penalties Year Deficiency Sec. 6662(a) 1990 $52,277 $10,455 Powertex, Inc., docket Nos. 20228-93, 6214-94: Tax Year A

(2). We hold that they are, but subject to the relief provisions of section 6013(e). (4) Whether petitioners for taxable years ended 1984 through 1986 and petitioner Henry Gherman for taxable years 1987 and 1988 are liable for additions to tax under section 6661. We hold that they are, but subject to the relief provisions of section 6013(e). (5) Whether petitioner Henry Gherman is liable for an addition to tax under section 6651(a)(1) for taxable year ended 1988. We hold that he is. (6) Whether

OLEY, Judge: Respondent determined the following deficiencies in and additions to petitioners' Federal income taxes: - 2 - Phillip Vazzana and Estate of Yvonne Vazzana, docket No. 914-96 Additions to Tax Year Deficiency Sec. 6653(a) Sec. 6653(b)(1) Sec. 6661 Sec. 6663(a) 1988 $69,781 $1,786 $25,550 $17,445 -- 1989 190,002 -- -- -- $14,251 Joseph M. Valenza and Mildred Valenza, docket No. 915-96 Additions to Tax Year Deficiency Sec. 6653(a) Sec. 6653(b)(1) Sec. 6661 Sec. 6663(a) 1988 $28,383 $112

335.00 Victor I. Podd, docket Nos. 20226-93, 6211-94: Penalties Year Deficiency Sec. 6662(a) 1988 $951 - 1989 12,065 $2,413 1990 135,094 27,019 Victor T. Podd, docket Nos. 20227-93, 6210-94: Additions to Tax Penalties Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $48,402 $2,402 $12,101 - 1989 475,634 - - $95,127 1990 68,637 - - 13,727 Julia Podd, docket No. 6213-94: Penalties Year Deficiency Sec. 6662(a) 1990 $52,277 $10,455 Powertex, Inc., docket Nos. 20228-93, 6214-94: Tax Year A

ective petitioners failed to report income from illegally received money or property in the taxable years 1982 and 1983;5 (2) whether the respective petitioners are liable for additions to tax for fraud under section 6653(b)(1) and (2) for the years 1982 and 1983;6 and (3) whether the respective petitioners are liable for the addition to tax under section 6661 for 1982 and 1983.

- 7 - (6) Whether the Takaos are liable for an addition to tax for substantial underpayment of tax under section 6661 for 1988.

ective petitioners failed to report income from illegally received money or property in the taxable years 1982 and 1983;5 (2) whether the respective petitioners are liable for additions to tax for fraud under section 6653(b)(1) and (2) for the years 1982 and 1983;6 and (3) whether the respective petitioners are liable for the addition to tax under section 6661 for 1982 and 1983.

loss carryover deductions. 3. Held, further, Ps are liable for additions to tax under sec. 6651(a), I.R.C. 1986, for 1987, and under sec. 6653(a), I.R.C. 1986, for 1986, 1987, and 1988. 4. Held, further, Ps are not liable for additions to tax under sec. 6661, I.R.C. 1986, for 1986, 1987, and 1988. Melvin J. Laney and Carolyn A. Laney, pro sese. Diane D. Helfgott, Robert Dietz, and Kristine A. Roth, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION CHABOT, Judge: Respondent determined defic

Accordingly, we will sustain respondent's determinations as to the deficiencies and the additions to tax pursuant to section 6661 on the ground that petitioner either defaulted or simply failed to carry his burden of proof.

n of section 7201. We hold he is. Background Respondent determined a deficiency in, and additions to, petitioner's Federal income tax for the taxable year 1987 as follows: - 3 - Additions to Tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $67,508 $50,631 50 percent of the $16,877 interest due on $67,508 Petitioner resided in Tigard, Oregon, at the time he petitioned this Court to redetermine respondent's determination of a deficiency in his income tax and additions to ta

pursuant to sec. 7872, I.R.C. Held: Ps have dividend income in an amount equal to the forgone interest from the below-market demand loans. KTA-Tator, Inc. v. Commissioner, 108 T.C. 100, 106-107 (1997), applied. Held, further, additions to tax under sec. 6661, - 2 - I.R.C., are sustained, subject to recomputation under Rule 155. Mike E. Jorgensen, for petitioners. Charles Baer, for respondent. MEMORANDUM OPINION NIMS, Judge: Respondent determined the following deficiencies, additions to tax, and

n Federal individual income tax and additions to tax under sections 6653(a)1 (negligence, etc.) and 6661 (substantial understatement of liability) against petitioner as follows: Additions to Tax Year Deficiency Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661 1987 $20,272 $1,014 1 $5,068 1 An amount equal to 50 percent of the interest due on $20,272. After a deemed concession by petitioner,2 the issues for decision are as follows: (1) Whether petitioner is entitled to various itemized employee bu

Finally, respondent determined an addition to tax under section 6661 for 1986, 1987, and 1988.

5,843 $11,882 1989 29,538 $22,154 1990 41,403 31,052 - 2 - Respondent also determined that if petitioner was not liable for fraud, he was liable for additions to tax and penalties for negligence under section 6653(a)(1) for 1988, penalties for negligence under section 6662 for 1989 and 1990, an addition to tax for substantial understatement under section 6661 for 1988 and additions to tax for failure to timely file under section 6651(a)(1) for 1988 and 1990.

Finally, respondent determined an addition to tax under section 6661 for 1986, 1987, and 1988.

With respect to the section 6661 addition to tax, we held that Mr.

In the subsection "Additions to Tax - Penalties & Interest", the Memorandum explained in detail that the substantial - 5 - understatement penalty under section 6661 or the valuation overstatement penalty under section 6659 could apply to the proposed charitable contributions.

and 182.1 Respondent determined additions to petitioners' Federal income taxes for the years as indicated: Catherine Chimblo and Estate of Gus Chimblo, Deceased, Catherine Chimblo, Executrix, docket No. 16546-96 Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1980 $479 * --- 1982 60 * --- 1983 619 * $3,097 1984 629 * 3,144 *50% of the interest due on the deficiency. Josephine Chimblo and Estate of Anthony J. Chimblo, Deceased, Rosalie Monahan, Executrix, docket No. 16804-96 Year Sec. 6653(a)(1) S

nt, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies in petitioners' Federal income taxes and additions to tax as follows: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1983 $142,520 $71,260 50 percent of $35,630 the interest due on $142,520 1984 369,494 184,747 50 percent of 92,374 the interest due on $191,310 1985 543,404 271,702 50 percent of 135,086 the interest due on $412,774 Additions to Tax Year Def

ons to tax for fraud under sec. 6653(b)(1) and (2), I.R.C., for - 2 - 1984 and 1985 and under sec. 6653(b)(1)(A) and (B), I.R.C., for 1986 and 1987. Held, further, P is liable for additions to tax for substantial underpayment of tax liability under sec. 6661, I.R.C., for 1984, 1985, 1986, and 1987. Robert L. Gallaway, for petitioner. Margaret C. Tinagero, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION LARO, Judge: Thomas G. Roots petitioned the Court to redetermine respondent's determin

(3) Whether petitioners are liable for (a) additions to tax for negligence under section 6653 for 1987 and 1988 and substantial understatement of income tax under section 6661 for 1987; and (b) the accuracy-related penalty under section 6662(a) for 1990 and 1991.

ncome taxes and a deficiency in and additions to petitioner Stanley Wade’s (petitioner’s) individual Federal income tax, as follows: - 2 - Stanley L. and Janet Wade Docket No. 4703-94 Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1982 $131,240 $65,620 * $32,810 1983 156,291 78,146 * 39,073 * 50 percent of interest due on portion of underpayment attributable to fraud. Stanley L. Wade Docket No. 4623-94 Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6654 1984 $1

o the Internal Revenue Code in effect for the taxable years in (continued...) - 2 - A. Lee Petersen Addition to Tax Year Deficiency Sec. 6653(b) 1984 -0- $11,224 1986 -0- 9,074 INI Builders, Inc. Additions to Tax Year Ending Deficiency Sec. 6653(b) Sec. 6661 9/30/84 $43,515 $21,758 $10,879 Having declined, because we lack jurisdiction over the subject matter, to address the argument of A. Lee Petersen (petitioner) that respondent’s claims against petitioner were discharged in bankruptcy, we hold

The issues remaining for our consideration concern whether petitioners are liable for additions to tax under section 6653(a)(1) and (2) and section 6661 for the taxable year 1982.

iled December 23, 1997. Held: Petitioner did not adequately disclose on his 1988 Federal income tax return relevant facts regarding the tax treatment of a claimed business interest expense deduction. Petitioner is liable for an addition to tax under sec. 6661, I.R.C. Walter B. Thurmond and Charles B. Koerth, for petitioner. Allan D. Hill, for respondent. MEMORANDUM OPINION SWIFT, Judge: Respondent determined a deficiency of $174,822 in petitioner’s Federal income tax for 1988 and - 2 - additions

and 182.1 Respondent determined additions to petitioners' Federal income taxes for the years as indicated: Catherine Chimblo and Estate of Gus Chimblo, Deceased, Catherine Chimblo, Executrix, docket No. 16546-96 Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1980 $479 * --- 1982 60 * --- 1983 619 * $3,097 1984 629 * 3,144 *50% of the interest due on the deficiency. Josephine Chimblo and Estate of Anthony J. Chimblo, Deceased, Rosalie Monahan, Executrix, docket No. 16804-96 Year Sec. 6653(a)(1) S

pondent determined that petitioner had an income tax deficiency of $369,390 for 1987 and was liable for additions to tax for 1987 of $92,348 for failure to timely file under section 6651(a)(1) and $92,348 for substantial understatement of tax under section 6661. A hearing was held on petitioner's motion in Winston-Salem, North Carolina. We must decide the following issues: 1. Whether respondent's deficiency determination is valid for jurisdictional purposes. We hold that it is. 2. Whether it is

GS OF FACT AND OPINION PARR, Judge: Respondent determined deficiencies in petitioner's Federal income taxes and additions to tax for the taxable years 1984 and 1985 as follows: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1)1 Sec. 6653(b)(2) Sec. 6661 1984 $13,599 $ 6,780 * $ 3,390 1985 11,358 5,679 * 2,840 * 50 percent of the interest due on the deficiency in tax After concessions by the parties, the sole issue for decision is whether petitioner, who failed to report embezzlement income,

(8) Whether petitioner Sands is liable for an addition to tax under section 6661 for a substantial understatement of tax for each of the taxable years 1984, 1985, and 1986.

(8) Whether petitioner Sands is liable for an addition to tax under section 6661 for a substantial understatement of tax for each of the taxable years 1984, 1985, and 1986.

is liable for an addition to tax for negligence or intentional disregard of rules or regulations pursuant to section 6653(a)(1); and (6) whether petitioner is liable for an addition to tax for a substantial understatement of income tax pursuant to section 6661. FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulation of facts and supplemental stipulations of facts 1Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for

7430 was amended most (continued...) -2- and Rule 231, filed June 24, 1997, and petitioner's amended motion, filed September 2, 1997.2 Petitioner's motion is for only the reasonable litigation costs it expended on the issue of whether it was liable for the addition to tax pursuant to section 6661 (the section 6661 issue) in Galedrige Construction, Inc.

The regulations under section 6661 provide in pertinent part: 7(...continued) F.3d 954 (9th Cir.

Section 6661 Respondent determined that petitioners are liable for the section 6661 addition to tax for 1988. Petitioners bear the burden of proving that respondent’s determination is erroneous. Rule 142(a); Cluck v. Commissioner, 105 T.C. 324, 339 (1995). Section 6661(a) provides for an addition to tax on underpayments attributable to a substantia

The addition to tax under section 6661 applies to any underpayment of tax that is attributable to a substantial understatement.

Respondent conceded in the answer that petitioners are not liable for the addition to tax under section 6661 or the penalties under section 6662.

dent. MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies in petitioner's Federal income taxes, additions to tax, and penalties as follows: Accuracy-Related Additions to Tax Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6661 Sec. 6662(c) 1988 $19,401 $4,818 $5,112 -- 1989 19,184 4,741 -- $3,837 - 2 - 1990 19,082 4,639 -- 3,816 1991 11,857 -- -- 2,371 The issues for decision are: (1) Whether petitioner underreported his income for 1988, 1989, 1990, and 1991, as

ion of this case. See Ginsburg & Levin, Mergers, Acquisitions and Buyouts, sec. 1002.1.1.4 (July 1996). In sum, we hold for petitioner on the issue of the recapture of the investment tax credit. Such being the case, there is no addition to tax under section 6661. We again point out that this opinion resolves only the investment tax credit recapture issue and that an additional issue relating to the allocation of deductions is still before the Court. See supra note 2. Reviewed by the Court. Cohen

Sparrow in 1986, and, if they - 3 - did, whether this amount is subject to self-employment tax. We hold they did, and it is. 3. Whether petitioners are liable for the additions to tax for substantial understatements determined by respondent under section 6661. We hold they are. 4. Whether Mrs. Sparrow is liable for the additions to her 1986 and 1988 taxes for delinquency determined by respondent under section 6651(a)(1). We hold she is. 5. Whether Mr. Sparrow is liable for the additions to tax

(7) Whether petitioner is liable for the addition to tax pursuant to section 6661 for a substantial understatement of tax for the taxable year 1988.

Substantial Understatement Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment of income tax if the underpayment is attributable to a substantial understatement.

dment to her answer, respondent asserted that $2,324,170 of the claimed compensation was unreasonable, increasing the claimed deficiency to $1,089,369. Respondent also asserted in the amendment that petitioner was liable for an addition to tax under section 6661. We must decide the amount of compensation paid by petitioner that is reasonable and thus deductible as a business expense under section 162. We hold all of it is.1 Unless otherwise stated, section references are to the Internal Revenue

enied. 3. Held, further, P earned the fee in question in 1987. 4. Held, further, R’s determinations of additions to tax under sec. 6653(a)(1)(A) and (B), I.R.C., for 1987 are sustained. 5. Held, further, R’s determination of an addition to tax under sec. 6661, I.R.C., for 1987 is sustained. - 2 - Kenneth S. Sussmane, for petitioner. Albert G. Kobylarz and Guy G. LaVignera, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION HALPERN, Judge: These three cases have been consolidated for trial,

Whether Petitioner Is Liable for the Substantial Understatement Addition to Tax Under Section 6661 for 1985, 1986, 1987, or 1988 Section 6661 provides for a 25-percent addition to tax on any substantial understatement.

respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COLVIN, Judge: Respondent determined deficiencies in petitioner’s Federal income tax and additions to tax as follows: - 2 - Accuracy-Related Additions to Tax Penalty Year Deficiency Sec. 6653(a)1 Sec. 6661 Sec. 66622 1985 $10,985 $549 $2,746 -- 1986 8,076 404 2,019 -- 1987 13,083 654 3,271 -- 1988 1,961 98 -- -- 1989 3,406 -- -- $578 1 Respondent determined that petitioner is liable for additions to tax for 1986 and 1987 under sec. 6653(a)(1)(

Section 6661 Substantial Understatement Addition Respondent determined that petitioners are liable for the addition to tax for substantial understatement of income tax in 1988. Income tax is substantially understated if the amount of the understatement exceeds the greater of 10 percent of the tax required to be shown on the return for the taxable y

(2) Whether petitioner is liable for the addition to tax for a substantial understatement of income tax under section 6661 for the taxable year at issue.

Sparrow in 1986, and, if they - 3 - did, whether this amount is subject to self-employment tax. We hold they did, and it is. 3. Whether petitioners are liable for the additions to tax for substantial understatements determined by respondent under section 6661. We hold they are. 4. Whether Mrs. Sparrow is liable for the additions to her 1986 and 1988 taxes for delinquency determined by respondent under section 6651(a)(1). We hold she is. 5. Whether Mr. Sparrow is liable for the additions to tax

enied. 3. Held, further, P earned the fee in question in 1987. 4. Held, further, R’s determinations of additions to tax under sec. 6653(a)(1)(A) and (B), I.R.C., for 1987 are sustained. 5. Held, further, R’s determination of an addition to tax under sec. 6661, I.R.C., for 1987 is sustained. - 2 - Kenneth S. Sussmane, for petitioner. Albert G. Kobylarz and Guy G. LaVignera, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION HALPERN, Judge: These three cases have been consolidated for trial,

o section 6621(c).1 As an alternative to the 1 Pursuant to the Tax Reform Act of 1986, Pub. L. 99-514, (continued...) -2- section 6659 addition to tax, respondent determined a $1,879 addition to tax for substantial understatement of tax pursuant to section 6661. Following concessions by petitioners,2 the issues for decision are: (1) Whether a closing agreement entered into by the parties on August 7, 1989, precludes petitioners from entitlement to a claimed depreciation deduction, investment tax

as follows:1 1Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Additions to Tax Year Deficiency Sec. 6661 Sec. 6653 (b) 1980 $113,469 -- $64,650 1981 39,563 -- 28,150 1982 40,360 $10,090 25,125 1983 19,561 4,890 9,781 1984 19,286 4,822 9,643 1985 41,813 10,453 20,907 1986 21,143 5,286 12,907 After concessions, the issues for decision are: (1) Wh

The section 6661 addition to tax is not applicable, however, if there was substantial authority for the taxpayer's treatment of the items in issue or if relevant facts relating to the tax treatment were disclosed on the return. Sec. 6661(b)(2)(B)(i) and (ii). Petitioners bear the burden of disproving respondent's determination of an addition to tax pur

Section 6661 Additions for Substantial Understatement In the notice of deficiency issued to NITCO, respondent determined that NITCO was liable for additions to tax for substantial understatement of income tax liability under section 6661 for 1987 and 1988. In the notice of deficiency issued to the Mussmans, respondent determined the Mussmans were l

Additions to Tax for 1986 and 1987 Respondent determined that petitioner was liable for additions to tax under three different Code sections: (1) section 6653(b) for civil fraud; (2) section 6661 for failing to pay estimated tax; and (3) section 6654 for substantial underpayment of tax.

Substantial Understatement Respondent determined that petitioners are liable for an addition to tax for a substantial understatement of income tax under section 6661 for taxable year 1988.

No. 20551-93. Filed February 14, 1996. Held: petitioners' rental losses redetermined; held, further, gain from sale of real property redetermined; held, further, petitioners are liable for additions to tax under sec. 6653(a), I.R.C., for 1988, under sec. 6661, I.R.C., for 1988, and for an accuracy-related penalty under sec. 6662(a), I.R.C., for 1989. Maurice E. Hodgkins and Barbara J. Hodgkins, pro se. Daniel J. Parent, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION NIMS, Judge: Respond

TERNAL REVENUE, Respondent Docket No. 21523-92. Filed April 16, 1996. Held: respondent's deficiency determinations are sustained; held, further, petitioners are liable for additions to tax under sec. 6651(a)(1), I.R.C., sec. 6653 (a)(1), I.R.C., and sec. 6661, I.R.C., for 1988; and for the accuracy-related penalty under sec. 6662(a), I.R.C., for 1989. Ara Eresian and Evelyn Eresian, pro se. Paul Colleran, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION NIMS, Judge: Respondent determined

6. Harry J. Kaplan, for petitioner. William D. Reese, for respondent. MEMORANDUM OPINION RAUM, Judge: The Commissioner determined deficiencies in petitioner's Federal income taxes as follows: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1)1 Sec. 6661 1985 $ 58,899 $ 73,4072 $14,725 1986 82,667 103,0293 20,667 1987 104,190 118,5594 25,848 This matter is before the Court on the respondent's Motion for Summary Judgment. Unless otherwise indicated, all section references are to the Internal R

The section 6661 addition to tax is not applicable, however, if there was substantial authority for the taxpayer's treatment of the items in issue or if relevant facts relating to the tax treatment were disclosed on the return. Sec. 6661(b)(2)(B)(i) and (ii). Petitioners bear the burden of disproving respondent's determination of an addition to tax pur

enied. 3. Held, further, P earned the fee in question in 1987. 4. Held, further, R’s determinations of additions to tax under sec. 6653(a)(1)(A) and (B), I.R.C., for 1987 are sustained. 5. Held, further, R’s determination of an addition to tax under sec. 6661, I.R.C., for 1987 is sustained. - 2 - Kenneth S. Sussmane, for petitioner. Albert G. Kobylarz and Guy G. LaVignera, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION HALPERN, Judge: These three cases have been consolidated for trial,

termination of the disputed addition to tax under sec. 6651, I.R.C., is sustained. 4. Held, further, R’s determination of additions to tax under sec. 6653(a), I.R.C., is sustained. - 2 - 5. Held, further, R’s determination of additions to tax under sec. 6661, I.R.C., is sustained. Samuel G. Weiss, for petitioner. Jody Tancer and Mark A. Ericson, for respondent. MEMORANDUM OPINION HALPERN, Judge: By notice of deficiency dated February 26, 1993 (the notice of deficiency), respondent determined def

the agreed underpayments for 1985, 1987, and 1988, for failure to file timely returns under section 6651(a)(1), for negligence or (intentional) disregard of rules or regulations under section 6653(a), and for substantial understatement of tax under section 6661. We hold petitioners liable for each of the additions to tax. FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulation of facts and attached exhibits are incorporated by this reference. At the time the pe

***(...continued) fact that petitioner was not negligent on his reporting position does not obviate the increased rate of interest under sec. 6621, or the delinquency addition under sec. 6651. Although the Commissioner may waive the applicability of sec. 6661 for reasonable cause and good faith, see sec. 6661(c), she can only do so after the taxpayer presents his or her claim to the Commissioner with sufficient evidentiary support, see, e.g., McCoy Enters., Inc. v. Commissioner, 58 F.3d 557 (10t

ner is liable for the fraud additions to tax. Petitioners dispute only four of the items in respondent's net - 13 - worth computations. Petitioners do not otherwise contest respondent's deficiency determinations or the additions to tax pursuant to section 6661. We conclude that petitioners have conceded the uncontested items. Money v. Commissioner, 89 T.C. 46, 48 (1987). Net Worth Analysis Respondent used the net worth plus expenditures method to determine that petitioners had unreported income

- 3 - (5) whether petitioners are liable for additions to tax for negligence under section 6653(a)(1)(A) and (B) for 1986 and 1987 and section 6653(a)(1) for 1988; and (6) whether petitioners are liable for additions to tax for substantial understatement of income tax under section 6661 for 1986, 1987, and 1988.

Additions to Tax for 1986 and 1987 Respondent determined that petitioner was liable for additions to tax under three different Code sections: (1) section 6653(b) for civil fraud; (2) section 6661 for failing to pay estimated tax; and (3) section 6654 for substantial underpayment of tax.

ess otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and (continued...) - 2 - Addition to Tax and Penalties Year Deficiency Sec. 6661 Sec. 6662(a) 1988 $11,351 $2,838 --- 1989 11,536 --- $2,307 1990 10,058 --- 2,012 After concessions, the issues for decision are: (1) Whether petitioners' horse activity during the taxable years at issue was engaged in for profit. We hold th

FINDINGS OF FACT AND OPINION JACOBS, Judge: By separate notices of deficiency, respondent determined the following with regard to petitioners’ Federal income taxes: Accuracy-Related Additions to Tax Penalty Year Deficiency Sec. 6651 Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $61,855 $6,222.91 $3,385.70 $15,463.75 --- 1989 52,532 --- --- --- $10,506 - 2 - Following concessions by the parties,1 the issues for decision are: (1) Whether petitioners are entitled to a claimed $650,000 theft loss in

- 3 - (6) whether petitioner is liable for the additions to tax for substantial understatement of tax under section 6661 for 1985, 1986, and 1987.

We also hold petitioner liable for the additions to tax for negligence under section 6653 and substantial understatement under section 6661, computed on the reduced deficiency.

ncies in petitioners’ Federal income tax and additions to tax as follows: 1 These cases were consolidated for purposes of trial, briefing, and opinion. - 2 - MTS International, Inc. Additions to Tax Year Deficiency Sec. 6651(a) Sec. 6653(a)(1)(A)1 Sec. 6661 1987 $217,716 $54,429 $10,885 $54,429 1 Respondent determined an addition to tax under sec. 6653(a)(1)(B) of 50 percent of the interest due on $217,716 for 1987. Robert C. Hughes III Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(

6. Harry J. Kaplan, for petitioner. William D. Reese, for respondent. MEMORANDUM OPINION RAUM, Judge: The Commissioner determined deficiencies in petitioner's Federal income taxes as follows: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1)1 Sec. 6661 1985 $ 58,899 $ 73,4072 $14,725 1986 82,667 103,0293 20,667 1987 104,190 118,5594 25,848 This matter is before the Court on the respondent's Motion for Summary Judgment. Unless otherwise indicated, all section references are to the Internal R

oner's Federal income tax as follows: 1 These cases were consolidated for purposes of trial, briefing, and opinion and will hereinafter be referred to as the instant case. - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $21,182 $15,887 1 $5,296 1 50 percent of the interest payable pursuant to sec. 6601 with respect to the portion of any underpayment that is due to fraud. Additions to Tax Year Deficiency Sec. 6651(f) Sec. 6653(b)(1) Sec. 6654 1988 $10,3

Section 6661 Additions for Substantial Understatement In the notice of deficiency issued to NITCO, respondent determined that NITCO was liable for additions to tax for substantial understatement of income tax liability under section 6661 for 1987 and 1988. In the notice of deficiency issued to the Mussmans, respondent determined the Mussmans were l

titled to a loss of $3,880 reported on Schedule C attached to his 1983 tax return; (3) whether petitioner is entitled to a loss in the amount of $2,410 claimed on his 1986 tax return; (4) whether petitioner is liable for additions to tax pursuant to section 6661 (substantial understatement of liability) for the taxable years 1983 through 1987; and (5) whether petitioner is 4 For the sake of completeness, we note that by order dated Dec.

MEMORANDUM OPINION TANNENWALD, Judge: Respondent determined a deficiency in petitioners' 1987 Federal income tax in the amount of $138,290 plus an addition to tax of $34,573 under section 6661.1 1 All section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

e liable for an addition to tax for negligence under section 6653(a)(1)(A) and (B) for 1986 and the accuracy-related penalty under section 6662(a) for 1989; (6) whether petitioners are liable for the substantial understatement addition to tax under section 6661 for 1986, and (7) whether petitioners are liable for the late filing addition to tax under section 6651(a)(1) for 1986 and 1989.1 1 The notice of deficiency reflects an investment tax credit carryforward issue involving $98,660 for 1986.

Substantial Understatement Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment of income tax if the underpayment is attributable to a substantial understatement.

Substantial Understatement Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment of income tax if the underpayment is attributable to a substantial understatement.

Substantial Understatement Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment of income tax if the underpayment is attributable to a substantial understatement.

--- MAJORITY --- Parker, Judge: Respondent determined a deficiency in petitioners’ Federal income tax in the amount of $2,531,650 and an addition to tax under section 6661 in the amount of $632,913 for the taxable year 1988.

ferences are to the Internal Revenue Code as amended and in effect for the year in issue. All Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - tax in the amount of $1,635 for substantial understatement of tax pursuant to section 6661. After a concession by respondent,2 the sole issue for our decision is whether petitioner is entitled to nonrecognition treatment under section 1034 for the gain he realized on the sale of his principal residence. Some of the facts have be

istic possibility that he would be subject to economic loss as a result of his long-term notes. 2. Held further, Ps are subject to additions to tax under sec. 6653(a), I.R.C., for negligence. 3. Held further, Ps are subject to additions to tax under sec. 6661, I.R.C., for substantial understatement of income tax liability. 4. Held further, Ps are liable for the increased rate of interest imposed under sec. 6621(c), I.R.C., for substantial underpayments attributable to tax- motivated transactions

The section 6661 addition to tax is not applicable, however, if there was substantial authority for the taxpayer's treatment of the items in issue or if relevant facts relating to the tax treatment of those items were disclosed on the return. Sec. 6661(b)(2)(B)(i), (ii). Neither exception applies here. Accordingly, we hold that petitioner is liable for

(5) Are petitioners liable for additions to tax under section 6661 for 1987 and 1988 for substantial understatement of taxes?

Section 6661 provides for an addition to tax equal to 25 percent of the amount of any underpayment attributable to a substantial understatement. An understatement is "substantial" when the understatement for the taxable year exceeds the greater of (1) 10 percent of the tax required to be shown or (2) $5,000. The understatement is reduced to the ext

. Ericson, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies in petitioners' Federal income taxes and additions to tax as follows: Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1985 $38,140 $36,201 50 percent of $5,847 the interest due on $23,388 Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1986 $256,295 $34,692 $88,473 50 percent of the $28,401 interest due on $

6661 1987 $10,832 $8,124 - $2,708 1988 35,158 26,369 - 8,790 1989 37,450 - $28,088 - - 2 - The issues for decision are: (1) Whether petitioners had embezzlement income during taxable years 1987, 1988, and 1989. We hold that they did not. (2) Whether the amount of petitioners' unreported income for taxable years 1987, 1988, and 1989 should be

-- 1166 -- We also sustain respondent's determination under section 6661, which provides for an addition to tax where the taxpayer makes a substantial understatement of income tax liability.

After concessions, the issues for adjudication are whether petitioner is liable for: (1) Income tax deficiencies for taxable years 1987 and 1988; (2) additions to tax for substantial understatement of income tax pursuant to section 6661 for taxable years 1987 and 1988; and (3) additions to tax for fraud pursuant to section 6653(b) for taxable years 1987 and 1988.

(8) Whether petitioners are liable for an addition to tax pursuant to section 6661 for tax year 1987.

re is a substantial understatement of income tax, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement. Sec. 6661(a).6 The taxpayer bears the burden of proving that the 6 Sec. 6661, as originally enacted in 1982, set the amount of the addition at 10 percent of the amount of any underpayment attributable to the substantial understatement. Sec. 8002 of the Omnibus Budget Reconciliation Act of 1986, Pub. L. 99-509, 100 S

The section 6661 addition to tax is not applicable, however, if there was substantial authority for the taxpayer's treatment of the items in issue or if relevant facts relating to the tax treatment of those items were disclosed on the return. Sec. 6661(b)(2)(B)(i) and (ii). Neither exception applies here. If the recomputed deficiency under Rule 155 sat

ANDUM FINDINGS OF FACT AND OPINION WRIGHT, Judge: Respondent determined deficiencies in and additions to tax and a penalty with respect to petitioners' Federal income taxes as follows: - 2 - Additions to Tax and Penalty Year Deficiency Sec. 6653(a) Sec. 6661 Sec. 6662 1988 $36,888 $1,844 $9,222 - 1989 10,613 - - $2,123 After concessions, the issues for our consideration are: (1) Whether petitioners are entitled to Schedule C deductions for the cost of labor in excess of the amounts allowed by re

Substantial Understatement Respondent has determined additions to tax under section 6661 for all years in issue and for all petitioners except for petitioners Zards.

Section 6661 provides for an addition to tax equal to 25 percent of the amount of any underpayment attributable to a substantial understatement. An understatement is "substantial" when the understatement for the taxable year exceeds the greater of (1) 10 percent of the tax required to be shown or (2) $5,000. The understatement is reduced to the ext

Substantial Understatement Respondent has determined additions to tax under section 6661 for all years in issue and for all petitioners except for petitioners Zards.

igman and Susan V. Sample, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION CLAPP, Judge: Respondent determined deficiencies in, and additions to, petitioner's Federal corporate income taxes as follows: FYE Additions to Tax June 30 Deficiency Sec. 6661 Sec. 6662 1989 $1,358,614 $339,654 -- 1990 922,494 -- $184,499 - 2 - After concessions by the parties, the issues for decision are: (1) Whether petitioner is entitled to a deduction for its fiscal year ended June 30, 1989, in the amount of

Respondent determined additions to tax under section 6653(a)(1) and (2) and section 6661 for each taxable year in issue.

istic possibility that he would be subject to economic loss as a result of his long-term notes. 2. Held further, Ps are subject to additions to tax under sec. 6653(a), I.R.C., for negligence. 3. Held further, Ps are subject to additions to tax under sec. 6661, I.R.C., for substantial understatement of income tax liability. 4. Held further, Ps are liable for the increased rate of interest imposed under sec. 6621(c), I.R.C., for substantial underpayments attributable to tax- motivated transactions

$70,000 for the taxable year 1987; (4) whether petitioner had self-employment income subject to self-employment tax for the taxable years 1987, 1988, and 1989; (5) whether petitioners are liable for additions to tax for negligence under section 6653(a)(1)(A) and (B) for 1987 and section 6653(a) for 1988, and substantial understatement of tax under section 6661 for the years 1987 and 1988 and under section 6662 for 1989.

e than 50 percent of the expenses attributable to two rental properties he held as a cotenant, where he paid all the expenses. We hold that he is not.2 (3) Whether petitioner is liable for additions to tax for substantial understatement of tax under section 6661. We hold that he is to the extent stated herein. In the petition, petitioner challenged the disallowance of a portion of his charitable contribution. Petitioner did not address this issue at trial or on brief. Thus, we find petitioner ha

rences are to the Tax Court Rules of Practice and Procedure. Petitioner has conceded an increased deficiency of $27,199 for 1983, with corresponding additions to tax for fraud under section 6653(b)(1) and (2) and for substantial understatement under section 6661. After other concessions by the parties, the following issues remain for decision: (1) Whether and in what amount petitioner is liable for the fraud additions under section 6653(b)(1) and (2) for 1983; (2) whether and in what amount peti

nd 1986; or in the alternative, whether petitioners are liable for the additions to tax for negligence pursuant to section 6653(a); (3) whether petitioners are liable for the additions to tax for substantial understatements of income tax pursuant to section 6661 for 1984, 1985, and 1986; and (4) whether the statute of limitations bars respondent's assessment and collection of petitioners' Federal income taxes.

--- MAJORITY --- Parr, Judge: Respondent determined deficiencies in and additions to petitioner’s Federal income tax for taxable years 1987 and 1988 as follows: Additions to tax Deficiency Sec. 6651 Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661 £ 1987 $7,013 $1,380 $620 $1,753 35,574 13,398 2,856 8,894 00 00 <Ji Although petitioner filed joint returns with her husband, Elwood Cluck (Elwood), Elwood is not a party herein because his liability was determined and discharged in the U.S. Bankruptcy

Commissioner, 1993 WL 140748, at *7 (finding that adequate disclosure under old section 6661 required that the taxpayer “disclose the relevant facts”).

8 Congress created the substantial understatement of liability penalty in 1982 as section 6661 under TEFRA § 323, 96 Stat.

1079, 1083 (1988) (holding that the Commissioner’s denial of waiver of the addition to tax under former section 6661 is subject to judicial review in a deficiency proceeding); Estate of Gardner v.

1079, 1083 (1988) (holding that the Commissioner’s denial of waiver of the addition to tax under former section 6661 is subject to judicial review in a deficiency proceeding); Estate of Gardner v.

1079, 1083 (1988) (holding that the Commissioner's denial ofa waiver ofthe addition to tax under former section 6661 is subject tojudicial review in a deficiency proceeding); Estate ofGardner v.

- 14 - Substantial Understatements ofIncome Tax Respondent determined that petitioner is liable for additions to tax under section 6661 for 1987 and 1988 and an accuracy-relatedpenalty under section 6662(a) and (b)(2) for 1989 for underpayments attributable to substantial understatements ofincome tax.

at 2395, repealed section 6661 and replaced it with the accuracy-relatedpenalty ofsection 6662, it is likely that petitioners had intended to refer to section 6651(h), which limits the penalty on an individual's failure to pay when an installment agreement is in effect.) Petitioners apparently also want to have the proposal regarded as an installment agreement for p

1994) (former section 6661), aff'g T.C.

1994) (former section 6661), aff’g T.C.

OF FACT AND OPINION MARVEL, Judge: In separate notices of deficiency respondent determined deficiencies in petitioners' Federal income taxes and accuracy-related penalties under section 6662(a)2 as follows: Penalty Docket Petitioner Year Deficiency Sec. 6661(a) 6984-08 Weekend Warrior Trailers, Inc. 2002 1$1,117,383 $446,953 6997-08 Mark E. Warmoth 2002 14,836 2,967 2003 1,252,944 250,589 15166-08 Mark E. Warmoth 2004 471,615 94,323 All monetary amounts have been rounded to the nearest dollar. R

For 1984 and 1985,' section 6653(b) (1) imposed a 50-pércent addition to tax on any portion of an underpayment of tax.that is due to fraud, and section 6653 (b) (2) imposed la 50-percent haddition to tax on any interest payable under section 6661 with respeåt to any portion of an underpayment of tax that is attributable to fraud.

For 1984 and 1985,' section 6653(b) (1) imposed a 50-pércent addition to tax on any portion of an underpayment of tax.that is due to fraud, and section 6653 (b) (2) imposed la 50-percent haddition to tax on any interest payable under section 6661 with respeåt to any portion of an underpayment of tax that is attributable to fraud.

The FPAA did not specifically mention penalties except for ,the following assertion: 5 - THE FOLLOWING PENALTTES ARE APPLICABLE TO THE PARTNER/SHAREHOLDER Section 6661 On July 13, 1989, the Contra Costa partners challenged the FPAA determination in a partnership-level proceeding before the Tax Court, Contra Costa Joioba Research Partners v.

OF FACT AND OPINION MARVEL, Judge: In separate notices of deficiency respondent determined deficiencies in petitioners' Federal income taxes and accuracy-related penalties under section 6662(a)2 as follows: Penalty Docket Petitioner Year Deficiency Sec. 6661(a) 6984-08 Weekend Warrior Trailers, Inc. 2002 1$1,117,383 $446,953 6997-08 Mark E. Warmoth 2002 14,836 2,967 2003 1,252,944 250,589 15166-08 Mark E. Warmoth 2004 471,615 94,323 All monetary amounts have been rounded to the nearest dollar. R

Graham for a deficiency of $105,082 and an addition to tax under section 6661 of $24,983 .

In their brief, petitioners concede that they are liable for the section 6661(a) addition to tax .

The Dombrowski draft explained that the Tax Court had issued its Dixon II opinion disallowing the interest deductions, imposing additions to tax for negligence under section 6653 and substantial understatement of tax under section 6661, and finding that the increased interest rate under section 6621(c) applied.

Addition to Tax Under Section 6661(a ) Section 6661(a) provides for an addition to tax of 25 percent of the amount of any underpayment attributable to a substantial understatement .'° There is a "substantiali' understatement" of an individual's income tax for any taxabl e year where the amount of.

The Dombrowski draft explained that the Tax Court had issued its Dixon II opinion disallowing the interest deductions, imposing additions to tax for negligence under section 6653 and substantial understatement of tax under section 6661, and finding that the increased interest rate under section 6621(c) applied.

The Dombrowski draft explained that the Tax Court had issued its Dixon II opinion disallowing the interest deductions, imposing additions to tax for negligence under section 6653 and substantial understatement of tax under section 6661, and finding that the increased interest rate under section 6621(c) applied.

The Dombrowski draft explained that the Tax Court had issued its Dixon II opinion disallowing the interest deductions, imposing additions to tax for negligence under section 6653 and substantial understatement of tax under section 6661, and finding that the increased interest rate under section 6621(c) applied.

The Dombrowski draft explained that the Tax Court had issued its Dixon II opinion disallowing the interest deductions, imposing additions to tax for negligence under section 6653 and substantial understatement of tax under section 6661, and finding that the increased interest rate under section 6621(c) applied.

6662 1978 $476,999.00 -- -- -- -- 1979 183,909.37 $9,190.47 -- -- -- 1980 454,396.00 22,720.00 -- -- -- 1981 340,578.00 17,029.00 $42,682 -- -- 1982 2,086,913.00 104,346.00 -- $208,691.00 -- 1983 1,150,652.00 57,532.60 -- 287,663.00 -- 1984 3,825,078.00 191,254.00 -- 949,211.00 -- 1986 897,224.00 44,861.60 -- 223,666.00 -- 1987 1,434

section 6661, in the amount of $13,887 .50 . On a date not disclosed by the record, petitioners filed a notice of appeal with the United States Court of Appeals for the Eighth Circuit (Court of Appeals for the Eighth Circuit) with respect to the Tax Court decision . On,January 16, 2002, that Court affirmed the Tax Court decision . Hollen v . Commi

6662 1978 $476,999.00 -- -- -- -- 1979 183,909.37 $9,190.47 -- -- -- 1980 454,396.00 22,720.00 -- -- -- 1981 340,578.00 17,029.00 $42,682 -- -- 1982 2,086,913.00 104,346.00 -- $208,691.00 -- 1983 1,150,652.00 57,532.60 -- 287,663.00 -- 1984 3,825,078.00 191,254.00 -- 949,211.00 -- 1986 897,224.00 44,861.60 -- 223,666.00 -- 1987 1,434

6662 1978 $476,999.00 -- -- -- -- 1979 183,909.37 $9,190.47 -- -- -- 1980 454,396.00 22,720.00 -- -- -- 1981 340,578.00 17,029.00 $42,682 -- -- 1982 2,086,913.00 104,346.00 -- $208,691.00 -- 1983 1,150,652.00 57,532.60 -- 287,663.00 -- 1984 3,825,078.00 191,254.00 -- 949,211.00 -- 1986 897,224.00 44,861.60 -- 223,666.00 -- 1987 1,434

6662 1978 $476,999.00 -- -- -- -- 1979 183,909.37 $9,190.47 -- -- -- 1980 454,396.00 22,720.00 -- -- -- 1981 340,578.00 17,029.00 $42,682 -- -- 1982 2,086,913.00 104,346.00 -- $208,691.00 -- 1983 1,150,652.00 57,532.60 -- 287,663.00 -- 1984 3,825,078.00 191,254.00 -- 949,211.00 -- 1986 897,224.00 44,861.60 -- 223,666.00 -- 1987 1,434

6662 1978 $476,999.00 -- -- -- -- 1979 183,909.37 $9,190.47 -- -- -- 1980 454,396.00 22,720.00 -- -- -- 1981 340,578.00 17,029.00 $42,682 -- -- 1982 2,086,913.00 104,346.00 -- $208,691.00 -- 1983 1,150,652.00 57,532.60 -- 287,663.00 -- 1984 3,825,078.00 191,254.00 -- 949,211.00 -- 1986 897,224.00 44,861.60 -- 223,666.00 -- 1987 1,434

- 10 - 2395, repealed section 6661 and replaced it with section 6662 .

Hassell] as follows : Deficiencies Additions to the Tax Taxable Income Year Tax § 6653(a) 6651 § 6661 1980 $18,642 .64 none none none 1981 $18,493 .26 none $2,638 .84 none 1982 $23,411 .00 none $1,510 .00 $5,853 .00 1983 $ 8,257 .00 $ 474 .55 $1,684 .20 $2,064 .00 1984 $37,344 .50 $1,867 .23 none $9,336 .00 That there are additions to the tax due from the petitioners for the taxable years 1983 and 1984, under the provisions of I .R.C.

858, 878 (1991) (amendment of section 6661 does not violate the Ex Post Facto Clause of the U .S .

6661 provided an addition to tax for a substantial understatement of a liability. The amount of the addition to tax was 25 percent of the amount of any underpayment attributable to such understatement. Respondent was not precluded from subsequently determining a deficiency for petitioners’ 2002 taxable year despite allowing a portion of the cl

pe, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION RUWE, Judge: Respondent determined deficiencies, penalties, and additions with respect to petitioner’s Federal income tax as follows: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6661 1988 $47,881 $37,298 $11,970 Addition to Tax Penalty Year Deficiency Sec. 6651(a)(1) Sec. 6663 1989 $36,620 $5,306 $27,465 Penalty Year Deficiency Sec. 6663 1990 $21,488 $16,116 The issues for decision are: (1) Whether petitioner received un

- 5 - under section 6653(a)(1)(B) for 1986.5 For 1984, respondent also determined an addition to tax of $880.75 under section 6661 for substantial understatement of tax.

- 5 - under section 6653(a)(1)(B) for 1986.5 For 1984, respondent also determined an addition to tax of $880.75 under section 6661 for substantial understatement of tax.

6621(d) 1980 $27,920 -- -- $33,970 1981 $45,294 $13,588 -- $67,177 1982 $70,920 $15,918 $4,465 $53,749 With respect to 1982, respondent subsequently abated the additions to tax under sections 6659 and 6661. The Hendrickses began making payments shortly after the assessment was made, paying the balance due for 1980 in full by October

1079, 1082 (1988) (holding that the Commissioner’s exercise of administrative discretion in failing to waive additions to tax under former section 6661 is subject to judicial review); Estate of Gardner v.

By notice of deficiency dated December 6, 1993, respondent determined a $5,358 deficiency and a $1,340 section 6661 addition to tax with respect to petitioner and Carole’s 1987 joint tax.2 Petitioner received the notice of deficiency but did not petition the Tax Court.

§ 6661 for the taxable years 1987 and 1988 in the amounts of $930 and $2,158, respectively; and That there are no additions to the tax due from the petitioners under the provisions of I.R.C. §§ 6653(a)(1)(A), 6653(a)(1)(B) and 6653(a)(1) for the taxable years 1987 and 1988. Joseph N. Iezzi (Mr. Iezzi), a certified public accountant, prepared Form 1

1079, 1082 (1988) (holding that the Commissioner’s exercise of administrative discretion in failing to waive additions to tax under former section 6661 is subject to judicial review); Estate of Gardner v.

163, 168-170 (continued...) - 37 - section 6653(a),3 section 6662,4 section 6013,5 section 6033,6 section 6651(f),7 section 6511,8 section 6011,9 section 6012,10 section 6072,11 and former section 6661,12 among others.

ct to Exhibits 4-R and 5-R. Because petitioner’s arguments for relief under sec. 6015(b) rely solely on the notice of determination, we sustain petitioner’s objections to the exhibits. - 3 - Additional Additions to tax Year income tax Sec. 6653(b) Sec. 6661 Interest 1984 $5,534.91 $2,464.87 $1,384.70 $1,997 1985 16,754.98 8,006.41 3,050.43 3,647 1986 28,848.86 22,157.87 6,528.77 3,190 On July 8, 1988, respondent issued a notice of deficiency for 1984 and 1985 and a separate notice of deficiency

We apply this test to “returns” for purposes of section 6501, section 6651(a)(1), section 6653(a), section 6662, section 6013, section 6033, section 6651(f), section 6511, section 6011, section 6012, section 6072, and former section 6661, among others.

for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION GALE, Judge: Respondent determined a deficiency in, and additions to, petitioner's Federal income tax for 1988 as follows: BERVED - 2 - Additions to tax Deficiency Sec. 6651(a) Sec. 6653(a)(1) Sec. 6661 $31,101 $7,697 $1,766 $7,775 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. In an amendment t

Federal income tax deficiencies that respondent determined against petitioners, respondent determined against petitioners additions to tax for 1980, 1982, and 1983 as follows: - 2 - Additions to Tax Year Sec. 6653(a) Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1980 $60* –-- -–- —-- 1982 --- $1,936 ** $9,682 1983 --- 40 *** -–- * Based upon a claimed investment tax credit carryback from 1983. ** 50 percent of interest due on $38,726. *** 50 percent of interest due on $805. Unless otherwise indicate

year 1990. In the notices, respondent determined deficiencies in petitioner and Mr. Rowe's Federal income taxes, additions to tax, and penalties as follows:3 Additions to Tax and Penalties Year Deficiency Sec. 6653 (b) (1) (A) Sec. 6653 (b) (1) (B) Sec. 6661 1987 $173,817 $130,363 ¹ $43,454 Sec. 6653(b)(1) Sec. 6661 1988 53,937 $40,453 $13,484 -- Sec. 6651(a)(1) Sec. 6663 1989 73,279 $13,792 $54,959 -- Sec. 6654 Sec. 6662(c) 1990 124,891 $8,057 $24,978 -- ¹50 percent of the interest due on $173,

ing to Metro Refuse, Inc.’s (Metro) tax years ending June 30, 1988 through 1990 (hereinafter tax years 1988 through 1990) as follows: Metro Refuse, Inc. Additions to tax and penalty Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6653(b) Sec. 6661 Sec. 6663 1988 $112,324 $83,393.25 50% of the interest –- -– -- due on $111,191 1989 186,457 -- –- $136,207.50 $46,614.25 -- 1990 160,854 -- –- –- –- $14,889.75 Unless otherwise indicated, all section references are to the Internal Revenue C

- 3 - year 1990. In the notices, respondent determined deficiencies in petitioner and Mr. Rowe’s Federal income taxes, additions to tax, and penalties as follows:3 Additions to Tax and Penalties Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $173,817 $130,363 $43,454 1 Sec. 6653(b)(1) Sec. 6661 1988 53,937 $40,453 $13,484 -- Sec. 6651(a)(1) Sec. 6663 1989 73,279 $13,792 $54,959 -- Sec. 6654 Sec. 6662(c) 1990 124,891 $8,057 $24,978 -- 150 percent of the interest due on $173,

ing to Metro Refuse, Inc.’s (Metro) tax years ending June 30, 1988 through 1990 (hereinafter tax years 1988 through 1990) as follows: Metro Refuse, Inc. Additions to tax and penalty Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6653(b) Sec. 6661 Sec. 6663 1988 $112,324 $83,393.25 50% of the interest –- -– -- due on $111,191 1989 186,457 -- –- $136,207.50 $46,614.25 -- 1990 160,854 -- –- –- –- $14,889.75 Unless otherwise indicated, all section references are to the Internal Revenue C

The one area that I may be able to offer a concession is regarding the assertion of the Section 6661 penalty.[5] If you have any additional information to submit or would like to discuss this matter further, please contact me at the above number.

Court, the statute of limitations is a jurisdictional question). Unless otherwise:indicated, all Rule references are to the Tax Court Rules of Practice and Procedure. - 4 - Additions to Tax Petitioners Deficiency Sec. 6653 (a) (1) Sec. 6653'(a) (2) Sec. 6661 The Harlans $548,186 $27,409 ¹ $137, 47 The ockels 62,490 3,125 2 15,653 ¹ 50 percent of interest due on $548,186. 2 50 percent of interest due on $62,490. The instant cases have been severed from docket Nos. 15653- 92 and 15654-923 for brie

otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Additions to Tax Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $450 * $2,617 1983 25 ** –-- * 50 percent of the interest due on $10,467. ** 50 percent of the interest due on $503. The issues for decision are: (1) Whether, for 1982 and 1983, petitioners are liable for the additions to tax under sect

tion references are to the Internal Revenue Code in effect for the year at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - interest due on a deficiency of $10,459 under section 6653(a)(2), and $2,615 under section 6661. The issues for decision are: (1) Whether petitioner is liable for the additions to tax under section 6653(a)(1) and (2) for negligence, and (2) whether petitioner is liable for the addition to tax under section 6661 for a substantial und

1997-152 (Court could not award statutory increase in addition to tax under section 6661 where not asserted by Commissioner).

Notice 90-20, supra, also provided that “The disclosure must be made on the return or on a properly completed Form 8275, Disclosure Statement Under Section 6661, attached to the return.” Sec.

Trial Judge: Respondent determined that petitioner was liable for the following additions to tax for taxable year 1982: $579 under section 6653(a)(1); 50 percent of the interest due on an $11,587 deficiency under section 6653(a)(2); and $2,897 under section 6661. Unless otherwise indicated, section references are to the Internal Revenue Code in - 2 - effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. The issues for decision are: (1) Whethe

cket No. 3336-95. Filed July 1·9, 2001. P and H filed a joint return for 1986. R determined a deficiency in tax on account of omission of embezzlement income and gain from liquidation of corporation, both items attributable to H. R also determined a sec. 6661, I.R.C., addition to tax for substantial understatement of income. P challenges deficiency and asks relief from liability under sec. 6015, I.R.C., as a so-called innocent spouse. 1. Held: P and H omitted from income embezzlement income and

rial Judge: Respondent determined that petitioner was liable for the following additions to tax for taxable year 1982: $1,070 under section 6653(a)(1), 50 percent of the interest due on a $21,404 deficiency under section 6653(a)(2), and $5,351 under section 6661. Unless otherwise indicated, section references are to the Internal Revenue Code in - 2 - effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. The issues for decision are: (1) Whethe

otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Additions to Tax Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $517 * $2,585 1983 20 ** –-- * Fifty percent of the interest due on $10,340. ** Fifty percent of the interest due on $393. The issues for decision are: (1) Whether, for 1982 and 1983, petitioner is liable for the additions to tax under

Section 6661 ................................... 102 - 4 - II. Issues Relating to Transferee Liability ................104 A. Background ..........................................104 B. Florida’s Statutory Provisions ......................106 1. Pre-1988 Transfers ..............................106 2. Post-1987 Transfers ...........................

otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Additions to Tax Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $443 * $2,215 1983 10 ** –-- * Fifty percent of the interest due on $8,858. ** Fifty percent of the interest due on $201. The issues for decision are: (1) Whether, for 1982 and 1983, petitioners are liable for the additions to tax under

Section 6661 ................................... 102 - 4 - II. Issues Relating to Transferee Liability ................104 A. Background ..........................................104 B. Florida’s Statutory Provisions ......................106 1. Pre-1988 Transfers ..............................106 2. Post-1987 Transfers ...........................

otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Additions to Tax Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $1,047 * $5,234 1983 50 ** –-- * Fifty percent of the interest due on $20,933. ** Fifty percent of the interest due on $1,006. The issues for decision are: (1) Whether, for 1982 and 1983, petitioners are liable for the additions to tax

stine V. Olsen, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined deficiencies in, additions to, and penalties on petitioners’ Federal income tax as follows: - 2 - Additions to Tax/Penalties Year Deficiency Sec. 6661(a) Sec. 6662 1987 $611,053 $152,763 - 1988 672,765 168,191 - 1989 113,278 - $22,656 1990 52,462 - 10,492 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule refer

otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. - 2 - Additions to Tax Year Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $443 * $2,215 1983 10 ** –-- * Fifty percent of the interest due on $8,858. ** Fifty percent of the interest due on $201. The issues for decision are: (1) Whether, for 1982 and 1983, petitioners are liable for the additions to tax under

eodore S. Ockels (hereinafter sometimes referred to as Theodore) and Rosemarie G. Ockels (Theodore and Rosemarie G. Ockels are hereinafter sometimes referred to collectively as the Ockelses) for 1985 as follows: Additions to tax Sec. Sec. 6653(a)(2) Sec. 6661 Petitioners Deficiency 6653(a)(1) The Harlans $548,186 $27,409 $137,047 The Ockelses 62,490 3,125 15,623 The instant cases have been severed from docket Nos. 15653-92 and 15654-92 for briefing and opinion on the second-tier partnership issu

Respondent also determined that ACT was liable for additions to tax of $102,677 under section 6653(b)(1) for fraud and $34,226 under section 6661 for substantial understatement of tax.

he complete disallowance of petitioner’s Schedule C deductions in the amount of $36,145. In the notice, respondent also determined additions to tax for negligence under section 6653(a)(1) and (2) and for substantial understatement of liability under section 6661. Petitioner received the notice of deficiency for 1985. However, petitioner did not file a petition with this Court contesting respondent’s deficiency determinations. Accordingly, on March 20, 1989, respondent assessed the deficiency in

7, 1991, the Court entered a stipulated decision that petitioner was liable for a deficiency in income tax in the amount of $36,016, an addition to tax under section 6653(a)(1) in the amount of $1,800.80, an addition to tax under section 6653(a)(2) in an amount equal to 50 percent of the interest due on the deficiency, and an addition to tax under section 6661 for substantial understatement of liability in the amount of $9,004.00.

The FPAA was accompanied by an explanation of items stating that the Commissioner intended to assert additions to tax (including additions to tax under section 6661) at the individual partner level.

AND OPINION HALPERN, Judge: These consolidated cases involve the following determinations by respondent of deficiencies in, additions to, and penalties on petitioner's Federal income tax: Additions to Tax & Penalties Year Deficiency Sec. 6651(a)(1) Sec. 6661 Sec. 6662 Sec. 6663 . 1987 $271,885 $48,616 $67,971 -- -- 1989 217,204 42,824 -- -- $162,903 1990 381,883 88,399 -- $75,524 -- Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in iss

hat respondent’s litigating position was reasonable. In Mauerman v. Commissioner, T.C. Memo. 1993-23, revd. 22 F.3d 1001 (10th Cir. 1994) (Mauerman I), the issue that was litigated was whether the taxpayer should be subject to additions to tax under section 6661(a). At trial, the taxpayer had the burden of proving that the Commissioner’s imposition of the additions to tax was arbitrary, capricious, or without sound basis in fact or law. This Court upheld the additions to tax and decided that the

hat respondent’s litigating position was reasonable. In Mauerman v. Commissioner, T.C. Memo. 1993-23, revd. 22 F.3d 1001 (10th Cir. 1994) (Mauerman I), the issue that was litigated was whether the taxpayer should be subject to additions to tax under section 6661(a). At trial, the taxpayer had the burden of proving that the Commissioner’s imposition of the additions to tax was arbitrary, capricious, or without sound basis in fact or law. This Court upheld the additions to tax and decided that the

re; therefore, P omitted from gross income $1,260,000 in 1983 and $107,000 in 1985. 2. Held, further, P is liable for additions to tax on account of fraud under sec. 6653(b)(1) and (2), I.R.C. 3. Held, further, P is liable for additions to tax under sec. 6661, I.R.C. 4. Held, further, R has met his burden of proof under sec. 6501(c)(1), I.R.C., and the statute of - 2 - limitations does not bar assessment and collection of tax for 1983 and 1985. Leonard Bailin, for petitioners. Drita Tonuzi and D

6661 Additional interest sec. 6621(c) 1980 $3,917 --- --- --- --- --- 1981 17 1982 1,248 1983 11,334 $1,043 1984 1,196 1985 4,662 1986 8,068 139 1987 54,708 7,402 $2,760 $16,412 $13,677 1988 52,048 8,981 2,670 15,614 13,012 Penalties Sec. 6662(h) Sec. 6662(e) Sec. 6662(d) Sec. 6662(c) 1989 $43,986 $4,008 $17,594 $8,797 $8,797 $8,797 1990 25,51

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

In short, the Youngs and the DuFresnes had contested the addition to tax only insofar as their liabilities depended upon respondent's prevailing on their deficiencies to a sufficient extent to exceed the substantial understatement threshold of section 6661(b)(1)(A) (deficiency must exceed greater of 10 percent of the tax required to be shown on the return, or $5,000).

96 (1990) (taxpayer's statement that his deduction of $207,000 was for "Legal fees re conservation of property held for production of income" falls short of the exposition of relevant facts required under section 6661(b)(2)(B)(ii)); Schirmer v.

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

In short, the Youngs and the DuFresnes had contested the addition to tax only insofar as their liabilities depended upon respondent's prevailing on their deficiencies to a sufficient extent to exceed the substantial understatement threshold of section 6661(b)(1)(A) (deficiency must exceed greater of 10 percent of the tax required to be shown on the return, or $5,000).

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

6621(c) 1982 $38,858.88 $1,942.94 1 $10,118.45 2 3 1983 26,826.77 1,341.34 1 8,048.03 2 3 1984 40,618.76 2,030.94 1 12,185.63 2 3 150 percent of the interest due on the entire deficiency. 225 percent of the understatement of tax (determined alternatively to the additions under sec. 6659). 3Interest computed at 120 percent of the norm

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Osteen dealt with whether the taxpayers therein had “substantial authority” for their tax treatment of an item, within the meaning of former section 6661(b)(2)(B)(i).

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

In short, the Youngs and the DuFresnes had contested the addition to tax only insofar as their liabilities depended upon respondent's prevailing on their deficiencies to a sufficient extent to exceed the substantial understatement threshold of section 6661(b)(1)(A) (deficiency must exceed greater of 10 percent of the tax required to be shown on the return, or $5,000).

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

In short, the Youngs and the DuFresnes had contested the addition to tax only insofar as their liabilities depended upon respondent's prevailing on their deficiencies to a sufficient extent to exceed the substantial understatement threshold of section 6661(b)(1)(A) (deficiency must exceed greater of 10 percent of the tax required to be shown on the return, or $5,000).

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

In short, the Youngs and the DuFresnes had contested the addition to tax only insofar as their liabilities depended upon respondent's prevailing on their deficiencies to a sufficient extent to exceed the substantial understatement threshold of section 6661(b)(1)(A) (deficiency must exceed greater of 10 percent of the tax required to be shown on the return, or $5,000).

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

Whether Kanter Is Liable for Section 6661 Additions to Tax for 1982 Through 1984, and 1986 Through 1988 .

D. Baker, for respondent. MEMORANDUM OPINION WHALEN, Judge: Respondent determined the following deficiencies, additions, and penalty with respect to petitioners' Federal income tax: - 2 - Penalty and Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6661(a) Sec. 6662(a) 1986 $14,882 $2,853 $2,442 -- 1987 13,971 2,811 2,811 -- 1988 3,527 882 -- -- 1989 3,825 956 -- -- 1990 10,182 2,546 -- $2,036 Unless stated otherwise, all section references are to the Internal Revenue Code as in effect for

6661 1982 $6,918 $3,459 $656 $1,730 1983 53,455 26,728 3,271 13,364 1984 41,584 20,792 2,614 10,396 1 Plus 50 percent of the interest on the deficiency under section 6653(b)(2). Petitioner resided in East Dublin, Georgia, at the time she filed the petition in the instant case. In the answer, respondent denied all substantive allegations of fac

arding income tax returns due before the effective date of the initial regulations promulgating rules for making adequate disclosure under section 6662(d)(2)(B)(ii), i.e., income tax returns due before December 31, 1991 (determined without regard to extensions of time for filing), the Internal Revenue Service announced that the rules applicable to section 6661 would be used for determining what constitutes adequate disclosure under section 6662(d)(2)(B).

Craddock, ___ F.3d ___ (10th Cir., May 1, 1998), the Commissioner determined an addition to tax for substantial understatement of tax under section 6661 for the taxable year 1985.4 The taxpayer had disclosed one of the unreported income items in the return.

6662(a) 1987 $3,253 50 percent of the $6,284 $11,031 interest due on $65,053 1988 727 1,824 2,114 1989 $8,423 1990 19,293 The issues for decision are: 1. Whether to grant the parties' respective motions to amend their pleadings; and 2. Whether the statutory period of limitations bars respondent from recharacterizing petitioners' dist

which recognized gain in the amount of $141,000 is taxable to MIC under sec. 1374, I.R.C. 5. Held, further, MIC is not liable for a negligence addition to tax under sec. 6653(a), I.R.C., but is liable for a substantial understatement addition under sec. 6661, I.R.C. - 3 - Frank Agostino, Alan G. Merkin, Mary Ann Perrone, and Susan M. Flynn, for petitioner. Patricia Y. Taylor and Clare W. Darcy, for respondent. BEGHE, Judge: Respondent determined the following deficiency and additions to tax: Ad

rt to redetermine respondent's determination of deficiencies in, and additions to, their 1984 through 1988 Federal income taxes. Respondent determined the following deficiencies and additions thereto: Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1984 --- $32,514 --- 1985 $5,013,651 1,280,929 $1,253,413 1986 19,342,834 967,142 4,835,709 1987 6,871,323 343,566 1,717,831 1988 2,523,008 126,150 630,752 Respondent also determined that petitioners are liable for the time-sensitive additi

x for fraud prescribed by section 6653(b)(1) and (2). Addition to Tax for Substantial Understatement of Liability Respondent also determined that petitioner is liable for the addition to tax for substantial understatement of liability prescribed by section 6661. Section 6661, as in effect for 1983, imposed an addition to tax equal to 25 percent of any underpayment which is attributable to a "substantial understatement of income tax". See Pallottini v. Commissioner, 90 T.C. 498 (1988). A "substan

12, 1996, respondent issued a notice of deficiency to Ernest and Ann Infelise. In the notice, respondent determined the following deficiencies in and additions to petitioners' Federal income tax: - 2 - Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6661 1983 $168,488 $84,244 $42,122 1984 64,130 32,065 16,033 1985 54,404 27,202 13,601 1986 122,711 92,033 30,678 1988 51,165 38,374 12,791 In their petition, filed on July 10, 1996, Ernest and Ann Infelise challenged respondent's determinations.

. MEMORANDUM FINDINGS OF FACT AND OPINION WRIGHT, Judge: Respondent determined deficiencies in petitioners' Federal income taxes and additions to tax, as follows: Additions to Tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6653(b)(1) Sec. 6661 1987 $67,485 $50,614 1 $16,871 1988 49,419 $37,064 12,355 1 50 percent of the interest due on $67,485. - 2 - Respondent determined, in the alternative to the fraud additions to tax, that petitioners are liable for the negligence additions t

eceived by respondent on April 3, 1990, and had an extended due date of August 15, 1989. Petitioners' 1989 joint Federal income tax return was received by respondent on 1 Respondent determined that petitioners are liable for an addition to tax under sec. 6661 for 1988. At the trial, petitioners did not mention this part of the determination. In addition, the parties were required to file briefs in a seriatim pattern, with respondent filing the opening brief. Petitioners failed to file a brief in

6661 1980 $103,197 $54,369 - - $6,221 - 1981 253,014 126,507 - - 19,387 - 1982 605,062 - $302,531 1 58,908 $151,266 1 50 percent of the interest due on the entire deficiency. 1 The substance of sec. 6653(b) as in effect for 1980 and 1981, and sec. 6653(b)(1) as in effect for 1982, appears in secs. 6651(f) and 6663 of present law. Unless indica

t. MEMORANDUM FINDINGS OF FACT AND OPINION SWIFT, Judge: Respondent determined deficiencies in and additions to tax with regard to petitioner as follows: - 2 - Docket No. 980-95 Additions to Tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $172,310 $128,693 * $43,078 * 50 percent of interest payable under sec. 6601 with respect to portion of underpayment attributable to fraud. Docket No. 26812-95 Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1) Sec.6653(b)

rt to redetermine respondent's determination of deficiencies in, and additions to, their 1984 through 1988 Federal income taxes. Respondent determined the following deficiencies and additions thereto: Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1984 --- $32,514 --- 1985 $5,013,651 1,280,929 $1,253,413 1986 19,342,834 967,142 4,835,709 1987 6,871,323 343,566 1,717,831 1988 2,523,008 126,150 630,752 Respondent also determined that petitioners are liable for the time-sensitive additi

to the Tax Court Rules of Practice and Procedure. 2 Unless indicated otherwise, all section references are to sections of the Internal Revenue Code of 1986 as in effect for the years in issue. - 3 - Additions to Tax Year Deficiency Sec. 6653(b) (1) Sec. 6661 Sec. 6663 1988 $9,090 $6,818 $2,273 1989 20,791 $15,593 1990 31,436 23,577 Petitioners Anthony and Gloria Donnora, hereinafter sometimes referred to as Anthony and Gloria, respectively, invoked this Court's jurisdiction by filing a timely pe

We also note that at the time petitioners made their investment, as our subsequent discussion in respect of the addition to tax under section 6661 reveals, most of the pertinent decisions had not been handed down so that there was at best a shortage of authority setting forth legal principles governing the tax consequences arising from the at- risk provisions of section 465.5 We think the foregoing circumstances meet the standard established in United States v.

t. MEMORANDUM FINDINGS OF FACT AND OPINION SWIFT, Judge: Respondent determined deficiencies in and additions to tax with regard to petitioner as follows: - 2 - Docket No. 980-95 Additions to Tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1987 $172,310 $128,693 * $43,078 * 50 percent of interest payable under sec. 6601 with respect to portion of underpayment attributable to fraud. Docket No. 26812-95 Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1) Sec.6653(b)

- 2 - addition to tax for substantial understatement of tax under section 6661 of $14,273.

tor would concede the overvaluation penalty under section 6659 at the 30-percent rate; (4) the - 36 - investor would concede the section 6621(c) interest; (5) the Government would concede the additions to tax for negligence under section 6653(a)(1) and (2); (6) the Government would concede the additions to tax for substantial understatement under section 6661; and (7) the investor had to execute a closing agreement.

ood, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION WHALEN, Judge: Respondent determined the following deficiencies in and additions to petitioners' Federal income tax: - 2 - Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1983 $148,421 $74,211 50% of the $37,105 interest due on $148,421 1985 105,160 52,580 50% of the interest due on $105,160 26,290 All section references are to the Internal Revenue Code as in effect during the years in issue. After concession

6661 Penalties sec. 6662(a) 1987 $3,253 50 percent of the interest due on $65,053 $6,284 $11,031 1988 727 1,824 2,114 1989 $8,423 1990 19 293 The issues for decision are: (1) Whether to grant the parties’ respective motions to amend their pleadings; and (2) whether the statutory period of limitations bars respondent from recharacterizing petit

--- MAJORITY --- Beghe, Judge: Respondent determined the following deficiency and additions to tax: Additions to tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1988 $477,816 $23,891 $119,454 In so doing, respondent determined that Martin Ice Cream Co. (MIC or petitioner) recognized taxable gain of $1,430,340 on the distribution of stock of its newly created subsidiary, Strassberg Ice Cream Distributors, Inc. (sic), to one of petitioner’s two shareholders, Arnold Strassberg (Arnold), in redemptio

1998), the Commissioner determined an addition to tax for substantial understatement of tax under section 6661 for the taxable year 1985.

following petitioners are consolidated herewith: Kolyn Enterprises Corp., docket No. 2983-94; and KCW Associates, Inc., docket No. 6667-95. - 2 - Cheng C. and Susan L. Kao, docket No. 2982-94 Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $186,609 $9,330 $46,652 -- 1989 975,338 -- -- $195,068 1990 663,670 -- -- 132,734 1991 347,457 -- -- 69,491 Kolyn Enterprises Corp., docket No. 2983-94 Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec.

In Mauerman, the Court of Appeals for the Tenth Circuit held that there was an abuse of discretion on the part of the Commissioner for not waiving a section 6661 addition to tax.

is the common parent as of January 1, 1984[;] and (3) a "Disclosure Statement under Section 6661 of the Inter- nal Revenue Code" that was required to be filed as part of that return in accordance with an agreement between Amax and Mitsui USA and that provided: An Agreement dated January 30, 1984 by and among Alumax Inc., AMAX Inc., Mitsui & Co.

ndent. MEMORANDUM FINDINGS OF FACT AND OPINION WHALEN, Judge: Respondent determined the following deficiencies in, additions to, and penalty on, petitioners' income tax for the years in issue: Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662 1988 $23,921 $1,196 $5,980 -- - 2 - 1989 10,097 -- -- $1,761 1990 615 -- -- -- Unless stated otherwise, all section references are to the Internal Revenue Code as in effect for the years in issue. After concessions, the issues rem

6662 1987 $26,076.87 $1,304 $6,519 -- 1989 22,047.87 -- -- $4,410 Unless stated otherwise, all section references are to the Internal Revenue Code as in effect during the years in issue. The above-captioned cases were consolidated for trial and briefing. After concessions by the parties, the issues remaining for decision are: (1) Whe

time the petition was filed. - 3 - Respondent issued a statutory notice of deficiency on February 14, 1994, in which deficiencies in income tax and additions to tax were determined as follows: Tax Year Ended Deficiency Additions to Tax Sec. 6653(a) Sec. 6661 July 31, 1988 (TYE 1988) $93,500 $4,675.00 $23,375 July 31, 1989 (TYE 1989) 73,651 3,682.55 20,883 Total 167,151 8,357.55 44,258 The notice of deficiency also made adjustments to petitioner's fiscal 1990 tax year, although no deficiency was

ibutable to negligence. The additions to tax determined under section 6653(a)(2) were calculated on the full amount of the deficiency in each case. 2In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. Respondent conceded the sec. 6661 additions to tax in the respective posttrial briefs in each case. In all six notices of deficiency, respondent also determined that interest on the deficiencies a

mpletion of the trial. The parties were afforded an opportunity for a new trial, in whole or in part, but they consented to disposition of the cases on the record of the trial before Judge Parker. - 2 - Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6661 1985 $163,221 1$ 81,611 $40,805 1986 240,868 1180,651 60,217 1987 39,636 129,727 9,909 1 Plus 50 percent of the interest due on the deficiency. In the alternative to the additions to tax for fraud, respondent determined additions to tax for

27, 1989, respondent determined deficiencies in and additions to petitioner Albert J. DeSantis' (hereinafter petitioner) Federal income tax for 1982, 1983, and 1984: Docket No. 5766-90 Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1982 $329,250 $164,625 1 $82,313 1983 1,326,062 663,031 1 331,516 1984 319,814 159,907 1 79,953 1 50 percent of the interest due on the deficiency. The deficiencies and additions to tax are based upon respondent's claim that petitioner frau

Petitioner's return included a Form 8275 (Disclosure Statement under Section 6661) with a rider that disclosed receipt of the elective share and its noninclusion in her gross income and also disagreed with inclusion of the capital gains in estate DNI.

In Mauerman, the Court of Appeals for the Tenth Circuit held that the Commissioner had abused discretion for not waiving a section 6661 addition to tax.

For 1982, respondent asserts that petitioners, John and Cornelia Vanderschraaf, are liable for an addition to tax for substantial understatement of tax under section 6661, equal to 25 percent of the respective underpayment of tax attributable to such understatement of tax.

Although not specifically addressed in the Stipulation of Settled Issues, because neither evidence nor argument was presented on the point by the affected petitioners, we deem those petitioners to have conceded respondent's determinations with respect to the section 6661 addition to tax.

We also note that, at the time decedent made his investment, as our subsequent discussion in respect of the addition to tax under section 6661 reveals, most of the pertinent decisions had not been handed down so that there was at best a shortage of authority setting forth legal principles governing the tax consequences arising from the at-risk provisions of section 465.13 We think the foregoing circumstances meet the standard established in United States v.

6662 1987 $26,076.87 $1,304 $6,519 -- 1989 22,047.87 -- -- $4,410 Unless stated otherwise, all section references are to the Internal Revenue Code as in effect during the years in issue. The above-captioned cases were consolidated for trial and briefing. After concessions by the parties, the issues remaining for decision are: (1) Whe

Respondent also determined that petitioners are liable for the section 6661 addition to tax for 1986.

6661 1985 $142,578.85 $30,936.52 $7,128.94* $6,798.00 $30,937.00 1986 113,423.25 21,292.62 5,671.16* 4,177.00 21,293.00 1987 56,026.00 13,957.00 2,801.00* 3,016.00 --- *Plus 50 percent of the interest on $123,746.07, $85,170.25, and $56,026.00, for 1985, 1986, and 1987, respectively. Jean Muldavin Additions to Tax Year Deficiency Sec. 6651 Sec

g, and opinion: S.K. Johnston, Jr., docket No. 16669-94; S.K. Johnston, Jr., and Gillian S. Johnston, docket No. 16670-94. - 2 - S.K. Johnston III and Julie N. Boyle, f.k.a., Julie N. Johnston, docket No. 16668-942: Additions to Tax Year Deficiency Sec. 6661 1987 $15,877.43 $4,969.00 1988 16,890.08 4,223.00 1989 12,026.80 - S.K. Johnston, Jr., docket No. 16669-94: Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1988 $174,164.19 $8,708.21 $43,609.00 S.K. Johnston, Jr., and Gillian S. J

Respondent also determined a section 6661 addition to petitioner's tax of $27,903 for taxable year 1989.

with respondent. - 6 - On June 11, 1993, respondent issued a notice of deficiency, which determined deficiencies in petitioners' Federal income taxes and additions to tax as follows:5 Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1985 $38,140 $36,201 50 percent of $5,847 the interest due on $23,388 Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 1986 $256,295 $34,692 $88,473 50 percent of the $28,401 interest due on $1

6661 1985 $142,578.85 $30,936.52 $7,128.94* $6,798.00 $30,937.00 1986 113,423.25 21,292.62 5,671.16* 4,177.00 21,293.00 1987 56,026.00 13,957.00 2,801.00* 3,016.00 --- *Plus 50 percent of the interest on $123,746.07, $85,170.25, and $56,026.00, for 1985, 1986, and 1987, respectively. Jean Muldavin Additions to Tax Year Deficiency Sec. 6651 Sec

6661 1985 $142,578.85 $30,936.52 $7,128.94* $6,798.00 $30,937.00 1986 113,423.25 21,292.62 5,671.16* 4,177.00 21,293.00 1987 56,026.00 13,957.00 2,801.00* 3,016.00 --- *Plus 50 percent of the interest on $123,746.07, $85,170.25, and $56,026.00, for 1985, 1986, and 1987, respectively. Jean Muldavin Additions to Tax Year Deficiency Sec. 6651 Sec

3In the alternative to the section 6659 addition to tax, respondent determined an addition to tax under section 6661 for substantial understatement of liability.

Although not specifically addressed in the Stipulation of Settled Issues, because neither evidence nor argument was presented on the point by the affected petitioners, we deem those petitioners to have conceded respondent's determinations with respect to the section 6661 addition to tax.

a notice of deficiency. In the notice, respondent determined the following deficiency and additions to tax in petitioners' consolidated income tax for the taxable year ended March 31, 1986: Additions to tax Deficiency Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661(a) $14,458,059 $722,903 1 $3,614,515 1 50% of the interest due on $14,458,059. 3 Although only petitioner's Motion for Leave is presently before the Court, petitioners' Motion to Vacate is essentially identical to petitioners' Motion for Le

3In the alternative to the section 6659 addition to tax, respondent determined an addition to tax under section 6661 for substantial understatement of liability.

g, and opinion: S.K. Johnston, Jr., docket No. 16669-94; S.K. Johnston, Jr., and Gillian S. Johnston, docket No. 16670-94. - 2 - S.K. Johnston III and Julie N. Boyle, f.k.a., Julie N. Johnston, docket No. 16668-942: Additions to Tax Year Deficiency Sec. 6661 1987 $15,877.43 $4,969.00 1988 16,890.08 4,223.00 1989 12,026.80 - S.K. Johnston, Jr., docket No. 16669-94: Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6661 1988 $174,164.19 $8,708.21 $43,609.00 S.K. Johnston, Jr., and Gillian S. J

arcerated in Alderson, West Virginia, when she filed the petition in this case. Respondent determined deficiencies in petitioner’s income tax and additions to tax and a penalty as follows: Additions To Tax and Penalty Year Deficiency Sec. 6653(b)(1) Sec. 6661 Sec. 6663 1988 $48,308 $36,104 $12,035 -- 1989 58,190 -- -- $43,643 Petitioner filed her petition on March 3, 1994. In it, she stated that she would be released from prison in January 1995. She asked that we delay proceedings until after sh

following petitioners are consolidated herewith: Kolyn Enterprises Corp., docket No. 2983-94; and KCW Associates, Inc., docket No. 6667-95. - 2 - Cheng C. and Susan L. Kao, docket No. 2982-94 Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $186,609 $9,330 $46,652 -- 1989 975,338 -- -- $195,068 1990 663,670 -- -- 132,734 1991 347,457 -- -- 69,491 Kolyn Enterprises Corp., docket No. 2983-94 Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec.

ibutable to negligence. The additions to tax determined under section 6653(a)(2) were calculated on the full amount of the deficiency in each case. 2In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. Respondent conceded the sec. 6661 additions to tax in the respective posttrial briefs in each case. In all six notices of deficiency, respondent also determined that interest on the deficiencies a

ibutable to negligence. The additions to tax determined under section 6653(a)(2) were calculated on the full amount of the deficiency in each case. 2In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. Respondent conceded the sec. 6661 additions to tax in the respective posttrial briefs in each case. In all six notices of deficiency, respondent also determined that interest on the deficiencies a

following petitioners are consolidated herewith: Kolyn Enterprises Corp., docket No. 2983-94; and KCW Associates, Inc., docket No. 6667-95. - 2 - Cheng C. and Susan L. Kao, docket No. 2982-94 Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $186,609 $9,330 $46,652 -- 1989 975,338 -- -- $195,068 1990 663,670 -- -- 132,734 1991 347,457 -- -- 69,491 Kolyn Enterprises Corp., docket No. 2983-94 Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec.

3In the alternative to the section 6659 addition to tax, respondent determined an addition to tax under section 6661 for substantial understatement of liability.

nalty under section 6662 for 1989, (5) whether corporate petitioner is liable for an addition to tax under section 6653(a)(1)(A) and (B) for taxable year ending March 31, 1988, (6) whether corporate petitioner is liable for an addition to tax under section 6661 for taxable year ending March 31, 1988, and (7) whether individual petitioners are liable for additions to tax under sections 6653 and 6661 for 1987 and 1988 for their failure to report interest income from an overseas bank account.

In separate notices of deficiency issued on April 2, 1996, respondent determined additions to tax for negligence under section 6653(a)(1) and (2) and for the substantial understatement of tax liability under section 6661 for 1982 and 1983.

ibutable to negligence. The additions to tax determined under section 6653(a)(2) were calculated on the full amount of the deficiency in each case. 2In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. Respondent conceded the sec. 6661 additions to tax in the respective posttrial briefs in each case. In all six notices of deficiency, respondent also determined that interest on the deficiencies a

- 5 - understatement under section 6661 for 1985 is computed based upon 10 percent of the underpayment as opposed to the 25-percent rate used in the notice of deficiency; (2) respondent is collaterally estopped in this case from litigating a second time the issue resolved by the District Court in petitioner's criminal case concerning the amount of petitioner's profits from h

ibutable to negligence. The additions to tax determined under section 6653(a)(2) were calculated on the full amount of the deficiency in each case. 2In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. Respondent conceded the sec. 6661 additions to tax in the respective posttrial briefs in each case. In all six notices of deficiency, respondent also determined that interest on the deficiencies a

Whether petitioner is liable for additions to tax under section 6661 for substantial understatement of income tax for 1986 and 1987.

27, 1989, respondent determined deficiencies in and additions to petitioner Albert J. DeSantis' (hereinafter petitioner) Federal income tax for 1982, 1983, and 1984: Docket No. 5766-90 Additions to Tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 1982 $329,250 $164,625 1 $82,313 1983 1,326,062 663,031 1 331,516 1984 319,814 159,907 1 79,953 1 50 percent of the interest due on the deficiency. The deficiencies and additions to tax are based upon respondent's claim that petitioner frau

of David Dickerson and Dorothy Dickerson (the Dickersons): Penalty Year Deficiency Sec. 6662(a) 1989 $21,113 $4,223 1990 26,378 5,276 Michael Michoff, Sr., and Beverly Michoff (Michoff, Srs.): Additions to Tax Penalty Year Deficiency Sec. 6653(a)1 Sec. 6661 Sec. 6662(a) 1986 $29,594 $1,480 $7,399 -0- 1987 8,447 422 2,112 -0- 1989 4,360 -0- -0- $872 1990 3,647 -0- -0- 729 Michael Michoff, Jr. (Michoff, Jr.): Additions to Tax Penalty Year Deficiency Sec. 6651 Sec. 6653(a) Sec. 6654 Sec. 6661 Sec.

For 1982, respondent asserts that petitioners, John and Cornelia Vanderschraaf, are liable for an addition to tax for substantial understatement of tax under section 6661, equal to 25 percent of the respective underpayment of tax attributable to such understatement of tax.

In that opinion, we held petitioner liable for fraud additions to tax for 1985 and 1986; also we concluded that petitioner conceded the section 6661 addition to tax for 1985.

ent determined deficiencies in, additions to, and a penalty on petitioners' Federal income taxes as follows: - 2 - Docket No. 10508-95 Year Deficiency 1988 $ 0 1989 4,796 Docket No. 10509-95 Additions to Tax and Penalty Year Deficiency Sec. 6653(a) Sec. 6661 Sec. 6662 1988 $15,059 $753 $3,560 --- 1989 79,636 --- --- $15,927 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Pr

of David Dickerson and Dorothy Dickerson (the Dickersons): Penalty Year Deficiency Sec. 6662(a) 1989 $21,113 $4,223 1990 26,378 5,276 Michael Michoff, Sr., and Beverly Michoff (Michoff, Srs.): Additions to Tax Penalty Year Deficiency Sec. 6653(a)1 Sec. 6661 Sec. 6662(a) 1986 $29,594 $1,480 $7,399 -0- 1987 8,447 422 2,112 -0- 1989 4,360 -0- -0- $872 1990 3,647 -0- -0- 729 Michael Michoff, Jr. (Michoff, Jr.): Additions to Tax Penalty Year Deficiency Sec. 6651 Sec. 6653(a) Sec. 6654 Sec. 6661 Sec.

is the common parent as of January 1, 1984[;] and (3) a “Disclosure Statement under Section 6661 of the Internal Revenue Code” that was required to be filed as part of that return in accordance with an agreement between Amax and Mitsui USA and that provided: An Agreement dated January 30, 1984 by and among Alumax Inc., AMAX Inc., Mitsui & Co.

6661 7/31/88 (TYE 1988) $93,500 $4,675.00 $23,375 7/31/89 (TYE 1989) 73,651 3,682.55 20,883 Total 167,151 8,357.55 44,258 The notice of deficiency also made adjustments to petitioner’s fiscal 1990 tax year, although no deficiency was determined for that year. A petition was filed on May 16, 1994. At that time, petitioner (or MMC), a California

ed taxable income as determined by R for each of the years in issue. P is also liable for an addition to tax for fraud under sec. 6653(b), I.R.C., for each of the years in issue, an addition to tax for substantial understatement of income tax under sec. 6661, I.R.C., for 1984, and an addition to tax for failure to pay estimated tax under sec. 6654, I.R.C., for 1986. James Luther Cochrane, pro se. Karen N. Sommers, for respondent. OPINION RUWE, Judge: Respondent determined deficiencies in and add

075 -- 1977 7,926,728 3,963,364 $253,655 1978 2,053,106 1,026,553 65,698 1979 1,076,634 538,317 -- 1980 441,711 220,855 -- 1981 252,288 126,144 -- 1982 325,922 -- -- Respondent also determined additions to tax for 1982 in the amount of $32,592 under section 6661 for substantial understatement of tax, in the amount of $81,480 under section 6651(a) for failure to timely file, in the amount of $16,296 under section 6653(a)(1) for negligence, and under section 6653(a)(2) in an amount equal to 50 per

8 1983 990,664 -- 247,666 1984 1,510,584 -- 377,646 1985 2,317,050 $175,058 579,263 1986 5,102,222 -- 1,275,556 1987 4,229,739 -- 158,778 1988 3,181,108 -- -- Respondent also determined that Pen Holdings' underpayments for the taxable years 1982 through 1988 constitute large corporate underpayments within the meaning of section 6621(c)(3) and that Pen Holdings is therefore liable for interest computed at the increased rate prescribed in section 6621(c)(1).

1) and (2) for 1985, and under section 6653(a)(1)(A) and (B) for 1986 and 1987. Petitioners have not established that they had substantial authority for the positions taken on their joint Federal income tax returns, nor that the relevant facts were adequately disclosed on their returns. For each year in issue, we sustain the additions to tax under section 6661. An appropriate order denying petitioners' motion for reconsideration will be issued, and decision will be entered under Rule 155.

- 11 - Section 6661 Respondent determined that petitioners are liable for the section 6661 addition to tax for 1987 and 1988. Petitioners bear the burden of proving that respondent’s determination is not correct. Rule 142(a); Cluck v. Commissioner, 105 T.C. at 339. Section 6661(a) provides for an addition to tax on underpayments attributable to a substant

6661 1981 $24,350.02 $1,217.50 1 $6,945.76 2 --- 1982 24,586 1,229.30 1 5,310.60 2 $1,721 1 50% of the interest due on the deficiency. 2 120% of the interest payable under sec. 6601. In the stipulation, petitioners agreed to be bound by the test case entitled Pinto v. Commissioner, docket No. 17407-86. This Court entered a decision in the Pint

Substantial Understatement of Income Tax Respondent determined that petitioners were liable for additions to tax for substantial understatement of income tax under section 6661 for 1986, 1987, and 1988.

6661 is asserted as an alternative to sec. 6659. In the alternative, the addition is asserted as 25 percent of the underpayments of $30,342, $20,794, $25,168, and $15,720 for the taxable years 1978, 1979, 1981, and 1982, respectively. 3 This amount is taken from the partial copy of the notice of deficiency attached to the petition. We note tha

spondent issued a notice of deficiency on April 5, 1990, determining deficiencies in and additions to petitioner's Federal income taxes for the taxable years 1980 through 1982 as follows: Additions to Tax Year Deficiency Sec. 6653(a) Sec. 6653(a)(1) Sec. 6661 1980 $76,748.00 $3,837 --- --- 1981 125,013.15 --- $6,250.65 --- 1982 47,634.00 --- 2,381.70 $11,908.50 The notice of deficiency determined a number of adjustments related to Merit Securities issues. See Seykota v. Commissioner, T.C. Memo.

pursuant to secs. 6651, 6653(a), and 6661 for that year. The parties have also stipulated that for its fiscal year 1989, petitioner is not liable for an addition to tax under sec. 6651, but that petitioner will be subject to an addition to tax under sec. 6661 for its fiscal year 1989 if there is a substantial understatement of tax as defined in sec. 6661(b) for that year, and that petitioner is liable for an addition to tax under sec. 6653(a) if petitioner is liable for an addition to tax under

In Mauerman, the Tenth Circuit Court of Appeals held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

Coyne, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION WELLS, Judge: Respondent determined a deficiency in, and additions to, petitioners’ Federal income tax as follows: Additions to Tax Year Deficiency Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661 1987 $73,150 $3,658 50% of the interest $18,288 due on the deficiency - 2 - Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Ru

In Mauerman, the Tenth Circuit Court of Appeals held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

issioner, T.C. Memo. 1993-232, we sustained respondent's Federal income tax deficiency determinations and additions to tax for 1982, 1983, and 1984, as reflected in the schedule below: Additions to Tax Year Deficiency Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1982 $11,047 $552 * $1,105 1983 13,503 675 * 1,350 1984 11,957 598 * 1,196 * 50 percent of interest due on portion of underpayment attributable to negligence. In Bybee v. Commissioner, supra, the Court of Appeals for the Ninth Circuit affir

ison, for respondent. MEMORANDUM OPINION RAUM, Judge: The Commissioner determined a deficiency in petitioners' 1982 Federal income tax in the amount of $7,686, and additions to tax and increased interest as follows: Sec. 6653(a)(1)1 Sec. 6653(a)(2) Sec. 6661 Sec. 6621 $384.30 50% of the interest $768.60 120% of the due on $7,686 adjusted rate This matter is before us on the Commissioner's Motion for Summary Judgment and/or Entry of Decision and Petitioners' Motion for Leave to File Amendment to

In particular, respondent determined that petitioners are liable for an addition to tax under section 6653(a)(1)(A) in the amount of $303, an addition to tax under section 6653(a)(1)(B) equal to 50 percent of the interest due on $6,054, and an addition to tax under section 6661 in the amount of $1,514, attributable to the tax deficiency arising from the disallowance of petitioner's distributive share of Irving & Co.

est payable with respect to the portion of the underpayment attributable to negligence. 4In the alternative to the addition to tax under sec. 6659, respondent also determined that petitioners' underpayments were subject to the addition to tax under sec. 6661. - 5 - The parties in each of these consolidated cases filed a Stipulation of Settled Issues concerning the adjustments relating to their participation in the Plastics Recycling Program. Although there are insubstantial differences in the la

Respondent determined that petitioner was liable for the following income tax deficiencies, additions to tax for delinquent filings under section 6651(a)(1), additions to tax for substantial understatements of income tax under section 6661, and an accuracy-related penalty for substantial understatement of income tax under section 6662(a), (b)(2), and (d): Additions to Tax Penalty Sec.

6662(a) 1988 $57,984 -0- $40 -0- $14,051 -0- 1989 14,202 $1,445 -0- $922 -0- $2,840 After concessions, the only issues remaining for decision are: (1) Whether petitioner is entitled to "innocent spouse" relief from liability for the understatement of tax attributable to funds his former wife Katy Dawson embezzled during 1988; and (2)

In two notices of deficiency, one dated October 27, 1988, and the other dated October 12, 1989, respondent determined deficiencies in the 1981 and 1982 Federal income taxes of petitioner Snyder in the respective amounts of $102,459 and $118,307, plus an addition to tax for 1982 in the amount of $26,211 under section 6661 for substantial understatement of tax.

ing terms: (1) Allowance of a deduction for 50 percent of the amount of the cash investment in the venture in the year(s) of investment to the extent of loss claimed; (2) Government concession of the substantial understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest 7 The record does not include a settlement o

nd are incorporated herein by reference. In the notice of deficiency, respondent determined the following deficiencies and additions to tax with respect to petitioners' tax years as indicated: Additions to Tax Year Deficiency Sec. 6651 Sec. 6653(a)1 Sec. 6661 1982 $1,912 $478 $96 -- 1983 39,739 9,935 1,987 $9,935 1984 58,887 14,722 2,944 14,722 1985 13,453 3,363 673 3,363 1986 50,112 12,528 2,506 12,528 1987 626 157 31 -- 1 Additions to tax (50 percent of interest due) under sec. 6653(a)(1)(B) a

In Mauerman, the Tenth Circuit Court of Appeals held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

6661 1981 $ 6,435 $322 1 $1,844 2 --- 1982 11,245 562 1 2,885 2 $407 1 50% of the interest due on the deficiency. 2 120% of the interest payable under sec. 6601. In the stipulation, petitioner agreed to be bound by the test case entitled Pinto v. Commissioner, docket No. 17407-86. This Court entered a decision in the Pinto case on January 18,

ons to tax under sections 6653(b) (fraud) and 6661 (substantial understatement of income tax) against petitioner as follows: Deficiency Additions to Tax Sec.6653 Sec.6653 Sec.6653 Sec.6653 Year Income Tax Excise Tax (b)(1) (b)(2) (b)(1)(A) (b)(1)(B) Sec. 6661 1983 $12,740 $105 $6,370 1 -- -- -- 1984 15,917 210 7,959 2 -- -- -- 1985 14,924 315 7,462 3 -- -- $3,652 1986 6,400 -- -- -- $4,800 4 -- 1987 4,778 315 -- -- 221 5 -- 1988 2,886 -- -- -- -- -- -- 1 50 percent of the interest due on $12,635

We upheld the section 6661 addition to tax for substantial understatement of tax, and found that losses and credits claimed with respect to the CME partnerships were attributable to tax-motivated transactions within the meaning of section 6621(c).

est payable with respect to the portion of the underpayment attributable to negligence. 4In the alternative to the addition to tax under sec. 6659, respondent also determined that petitioners' underpayments were subject to the addition to tax under sec. 6661. - 5 - The parties in each of these consolidated cases filed a Stipulation of Settled Issues concerning the adjustments relating to their participation in the Plastics Recycling Program. Although there are insubstantial differences in the la

6661 16922-90 Stuart A. and Harriet J. Gollin 1979 1$11,888 3 4$594 -- $3,566 -- 1980 12,728 3 4136 -- 818 -- 1982 9,348 3 467 5 2,804 6$2,337 19612-90 Myron and Patricia Fishbach 1982 17,471 873.55 3 5 -- 2,941.75 21847-90 Charles Fredericks, Jr. and Stephanie Fredericks 1982 2128,880 6,444 3 5 30,752.70 66,592.75 1The deficiencies in docket

6661 16922-90 Stuart A. and Harriet J. Gollin 1979 1$11,888 3 4$594 -- $3,566 -- 1980 12,728 3 4136 -- 818 -- 1982 9,348 3 467 5 2,804 6$2,337 19612-90 Myron and Patricia Fishbach 1982 17,471 873.55 3 5 -- 2,941.75 21847-90 Charles Fredericks, Jr. and Stephanie Fredericks 1982 2128,880 6,444 3 5 30,752.70 66,592.75 1The deficiencies in docket

6661 16922-90 Stuart A. and Harriet J. Gollin 1979 1$11,888 3 4$594 -- $3,566 -- 1980 12,728 3 4136 -- 818 -- 1982 9,348 3 467 5 2,804 6$2,337 19612-90 Myron and Patricia Fishbach 1982 17,471 873.55 3 5 -- 2,941.75 21847-90 Charles Fredericks, Jr. and Stephanie Fredericks 1982 2128,880 6,444 3 5 30,752.70 66,592.75 1The deficiencies in docket

In Mauerman, the Tenth Circuit Court of Appeals held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

MEMORANDUM FINDINGS OF FACT AND OPINION CHABOT, Judge: Respondent determined deficiencies in Federal individual income tax and additions to tax under sections 66591 (valuation overstatements) and section 6661 (substantial understatement of liability) against petitioners as follows: Additions to Tax Sec.

ORANDUM FINDINGS OF FACT AND OPINION JACOBS, Judge: Respondent determined the following deficiencies in, and additions to, petitioners' Federal income taxes: tBERVED 'OCT 1 01996 -2- Additions to Tax Year Deficiency Sec. 6653(a)(1)* Sec. 6653(a)(2) Sec. 6661 1985 $388,937 $19,447 2 $ 97,235 1986 950,703 47,535 2 237,676 ¹ The addition to tax for negligence or intentional disregard of rules or regulations is codified under sec. 6653 (a) (1) (A) and (B) for 1986. 2 50 percent of the interest due o

xes and additions to tax as follows: Lynnda Speer, Donor Gift tax - docket No. 6626-94 Year Deficiency 1990 $625,702 Roy M. and Lynnda L. Speer Income tax - docket No. 6627-94 Accuracy-Related Additions to Tax Penalty Year Deficiency Sec. 6653(a)(1) Sec. 6661 Sec. 6662(a) 1988 $530,514 $26,526 $132,629 -- 1989 774,565 -- -- $131,189 1990 1,424,760 -- -- 175,653 Roy M. Speer, Donor Gift tax - docket No. 6628-94 Year Deficiency Sec. 6651(a)(1) 1985 $9,643 $2,411 1986 233,720 58,430 1987 1,103,590

Respondent also determined additions to tax in the amount of $7,411 under section 6661, in the amount of $3,705 under section 6653(a)(1) for negligence, and under section 6653(a)(2) in an amount equal to 50 percent of the interest due on the underpayment attributable to negligence.

4,613 under section 6659 for valuation overstatement. Respondent also determined that interest on the deficiency accruing after December 31, 1984, 1 In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. 2 For taxable year 1982, the addition to tax for negligence in an amount equal to 50 percent of the interest due on the amount of the underpayment attributable to negligence was provided for under

sell F. Kurdys, for respondent. MEMORANDUM OPINION RUWE, Judge: Respondent determined deficiencies in petitioners' Federal income taxes and additions to tax as follows: Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6661 1985 $15,265 $3,816 $1,160 50 percent of $3,816 the interest due on $15,265 - 2 - Additions to Tax Year Deficiency Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661 1987 $5,503 $275 50 percent of the $1,376 interest due on $5,503 The issues f

Respondent has conceded the substantial understatement penalty under section 6661 for 1988.

In Mauerman, the Court of Appeals for the Tenth Circuit held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

er a notice of deficiency in which she determined that, for 1982, petitioner was liable for (1) additions to tax for negligence under sections 6653(a)(1) and 6653(a)(2), and (2) an addition to tax for a substantial understatement of income tax under section 6661. These additions to tax are affected items because they are based on tax owing by petitioner as a result of adjustments to partnership items appearing on Computer Graphics' partnership return for 1982. The affected items notice of defici

In Mauerman, the Tenth Circuit Court of Appeals held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

this material point. We therefore reject Mr. Kelly's claim of reliance on his accountant. The additions to tax under section 6653(a) are accordingly sustained. Respondent further determined that petitioners are liable for the additions to tax under section 6661. Section 6661 imposes an addition to tax equal to 25 percent of the amount of any underpayment attributable to a substantial understatement of income tax. An understatement is substantial if it exceeds the greater of 10 percent of the ta

In a notice of deficiency dated January 11, 1990, respondent determined a deficiency in the 1982 joint Federal income tax of petitioners Philippe and Nadine Grelsamer and additions to tax for that year under section 6653(a)(1)(A) and (B) for negligence and under section 6659 for valuation overstatement (and in the alternative thereto under section 6661 for substantial underpayment).

rney provided more information to respondent in response to the March 3, 1995, letter. Based on this documentation, respondent, in a letter dated March 22, 1995, conceded additional income adjustments and the substantial understatement penalty under section 6661. In the same letter, respondent sent copies of a proposed stipulation settlement. By letter dated March 29, 1995, respondent's Appeals Officer confirmed by letter to petitioner's attorney a basis for settlement of the case for 1988 and i

est payable with respect to the portion of the underpayment attributable to negligence. 4In the alternative to the addition to tax under sec. 6659, respondent also determined that petitioners' underpayments were subject to the addition to tax under sec. 6661. - 5 - The parties in each of these consolidated cases filed a Stipulation of Settled Issues concerning the adjustments relating to their participation in the Plastics Recycling Program. Although there are insubstantial differences in the la

Substantial Understatement of Income Tax Respondent determined that petitioners were liable for additions to tax for substantial understatement of income tax under section 6661 for 1986, 1987, and 1988.

In Mauerman, the Court of Appeals for the Tenth Circuit held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

In two notices of deficiency, one dated October 27, 1988, and the other dated October 12, 1989, respondent determined deficiencies in the 1981 and 1982 Federal income taxes of petitioner Snyder in the respective amounts of $102,459 and $118,307, plus an addition to tax for 1982 in the amount of $26,211 under section 6661 for substantial understatement of tax.

termined the following deficiencies and additions to tax with respect to petitioners' Federal income taxes: Jimmy Don and Sharon L. Gilchrist, docket No. 10132-94 Additions to Tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6653(b)(1) Sec. 6661 1986 $34,608 $25,956 1 -- $8,652 1987 23,644 17,733 2 -- 5,911 1988 38,316 -- -- $28,737 9,579 1 50 percent of the statutory interest due on $34,608. 2 50 percent of the statutory interest due on $23,644. Door Control Services, Inc., docket

ntial controversy involved. Schirmer v. Commissioner, supra at 286 (citing S. Rept. 97-494 (Vol. 1), at 274 (1982)). Petitioners did not attach a Form 8275 to their return, nor did they attach a statement that identified itself as a disclosure under section 6661. The requirement of adequate disclosure is not satisfied merely by listing the deductions on Schedule F attached to the tax return, and therefore we find that there was no adequate disclosure. If there was reasonable cause for the underp

est payable with respect to the portion of the underpayment attributable to negligence. 4In the alternative to the addition to tax under sec. 6659, respondent also determined that petitioners' underpayments were subject to the addition to tax under sec. 6661. - 5 - The parties in each of these consolidated cases filed a Stipulation of Settled Issues concerning the adjustments relating to their participation in the Plastics Recycling Program. Although there are insubstantial differences in the la

6651(a)(1) Sec. 6662(a) 1988 $13,977.82 $698.89 $3,494 --- --- 1989 14,786.75 --- --- $3,615.75 $2,957.35 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the taxable years before the Court, and all Rule references are to the Tax Court Rules of Practice and Procedure. After concession

Prior to trial herein, petitioner and respondent agreed that for 1986 and 1987, petitioner is liable for income tax deficiencies of $6,247 and $5,638, respectively, and additions to tax for substantial understatements of income tax under section 6661(a) for 1986 of $1,501.

ending September 30, 1987, and 1988, under section 6653(a)(1)(A) and (B); and for its taxable year ending September 30, 1989, under section 6653(a)(1); and for an accuracy-related penalty for negligence for its taxable year ending September 30, 1990, under section 6662(a); (5) whether the corporate petitioner is liable for an addition to tax under section 6661 for its taxable year ending September 30, 1988; (6) whether petitioners Frederick Malcolm Sutton and Carolyn P.

petitioned the Court to redetermine respondent's determination of the following deficiencies in its Federal income taxes and additions thereto under section 6661: Additions to Tax Year or period ended Deficiency Sec.

ioner a notice of deficiency in which respondent determined that, for 1982, petitioner was liable for additions to tax for negligence under section 6653(a)(1) and 6653(a)(2) and an addition to tax for a substantial understatement of income tax under section 6661. These additions to tax are affected items because they are based on tax owing by petitioner as a result of adjustments to partnership items appearing on Computer Graphics' partnership return for 1982. Petitioner timely filed a petition

In two notices of deficiency, one dated October 27, 1988, and the other dated October 12, 1989, respondent determined deficiencies in the 1981 and 1982 Federal income taxes of petitioner Snyder in the respective amounts of $102,459 and $118,307, plus an addition to tax for 1982 in the amount of $26,211 under section 6661 for substantial understatement of tax.

969,584, respectively, to $501,134 and $332,601, respectively. For 1986, 1987, and 1988, respondent also determined against Mr. Makalintal and petitioner additions to tax for negligence under section 6653(a) and for substantial understatements under section 6661. As indicated, Mr. Makalintal apparently now resides in the Philippines, is divorced from petitioner, and apparently is ignoring his obligations to petitioner and his children under the divorce decree and property settlement agreement an

the amount of the underpayment attributable to negligence, $6,619. Respondent also determined that interest on deficiencies accruing after December 2 In the alternative to the sec. 6659 addition to tax, respondent determined an addition to tax under sec. 6661 for substantial understatement of liability. 3 For taxable year 1982, the addition to tax for negligence in an amount equal to 50 percent of the interest due on the amount of the underpayment attributable to negligence was provided for unde

969,584, respectively, to $501,134 and $332,601, respectively. For 1986, 1987, and 1988, respondent also determined against Mr. Makalintal and petitioner additions to tax for negligence under section 6653(a) and for substantial understatements under section 6661. As indicated, Mr. Makalintal apparently now resides in the Philippines, is divorced from petitioner, and apparently is ignoring his obligations to petitioner and his children under the divorce decree and property settlement agreement an

In Mauerman, the Tenth Circuit Court of Appeals held that the Commissioner had abused her discretion for not waiving a section 6661 addition to tax.

r decision are: (1) Whether petitioner received taxable income as determined by respondent for each of the years in issue; (2) whether petitioner is liable for an addition to tax for fraud under section 6653(b) for each of the years in issue; (3) whether petitioner is liable for an addition to tax for substantial understatement of income tax under section 6661 for 1984; and (4) whether petitioner is liable for an addition to tax for failure to pay estimated tax under section 6654 for 1986.

for the year 1987 in the amount of $130,232; (2) whether petitioners underreported their taxable income for the year 1988 in the amount of $85,231; (3) whether the above-mentioned understatements of income for 1987 and 1988 were attributable to fraud by Donald Ferry (petitioner); and (4) whether petitioners are liable for an addition to tax under section 6661 for 1987 and 1988.

income. Also, petitioners showed the receipt of $1.5 million paid in connection with the settlement, but excluded the entire $1.5 million from their taxable income. The amounts were shown on the tax returns on a Form 8275, Disclosure Statement Under Section 6661. Respondent, in her notice of deficiency, increased petitioner's income as shown on petitioners' Federal income tax return for the year 1987 by the amount of $500,000, explained as a court-ordered award, and by the amount of $1,305,000,

Substantial Understatement Addition to Tax Respondent also determined that Elvin (for 1983, 1984, 1985, and 1986) and YOC (for 1983, 1984, and 1985) are liable under section 6661 for an addition to tax equal to 25 percent of the respective underpayments of tax.

at the end thereof the following new paragraph: "(3) Transitional Rule.--If-- "(A) a joint return under section 6013 of the Internal Revenue Code of 1954 was filed before January 1, 1985, "(B) on such return there is an understatement (as defined in section 6661(b)(2)(A) of such Code) which is attributable to disallowed deductions attributable to activities of one spouse, "(C) the amount of such disallowed deductions exceeds the taxable income shown on such return, "(D) without regard to any det

Accordingly, to the extent that petitioners' understatement, for any taxable period under consideration, is substantial within the meaning of section 6661, petitioners are liable for the addition to tax for a substantial understatement under section 6661.

urt on petitioner's motion for partial summary judgment filed March 10, 1995, pursuant to Rule 121. Respondent determined deficiencies in petitioner's Federal income tax and additions to tax as follows: Additions to Tax Year Deficiency Sec. 6653(b) Sec. 6661 1980 $25,265 $16,983 -- 1981 34,220 25,018 -- 1982 21,196 10,598 $5,299 The statutory notice in this case was issued on July 1, 1992. Petitioner's motion is directed only to the deficiency and additions to tax determined under the notice for

168, I.R.C. 2. Held, further, the expenditures made by P's wholly owned S corporation are nondeductible under sec. 162(a), I.R.C., on account of being preopening expenses not incurred in a trade or business of the corporation. 3. Held, further, the sec. 6661, I.R.C., additions to tax and sec. 6662, I.R.C., penalties determined by respondent are, in part, sustained. - 2 - Richard J. Sapinski and Robert J. Alter, for petitioners. Robert A. Baxter, for respondent. MEMORANDUM FINDINGS OF FACT AND OP

deficiency should have resulted in a deficiency of $51,678 for the taxable year 1985. Petitioners do not dispute (continued...) - 2 - petitioners' Federal income tax and additions to tax as follows: Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6661 1985 $23,877 $5,969 $5,969 After concessions, the issues for decision are: (1) Whether petitioners are entitled to a Schedule A deduction for charitable contributions in the amount of $1,127; (2) whether petitioner Joan Marie Kerrigan (Mrs.

Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment if the underpayment is attributable to a substantial understatement. Both sections 6653(a)(1) and 6661 apply to tax returns with a due date prior to December 31, 1989. The sections were repealed December 31, 1989, with the current sections both recodified i

Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment if the underpayment is attributable to a substantial understatement. Both sections 6653(a)(1) and 6661 apply to tax returns with a due date prior to December 31, 1989. The sections were repealed December 31, 1989, with the current sections both recodified i

Section 6661 imposes an addition to tax in an amount equal to 25 percent of the underpayment if the underpayment is attributable to a substantial understatement. Both sections 6653(a)(1) and 6661 apply to tax returns with a due date prior to December 31, 1989. The sections were repealed December 31, 1989, with the current sections both recodified i

an Friday, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION COHEN, Judge: Respondent determined a deficiency of $136,903 in petitioner's Federal income taxes for 1988 and additions to tax of $102,677 under section 6653(b)(1) and $34,226 under section 6661. In the answer, respondent alleged, in the alternative, that petitioner is liable for additions to tax for delinquency and negligence under sections 6651(a)(1) and 6653(a)(1), respectively. Unless otherwise indicated, all section referen

paid as dues to the Midland Hills Country Club of Roseville, Minnesota, for the years at issue; (3) whether petitioners are liable for additions to tax for negligence under sections 6653(a)(1)(A) and (B) for 1987 and section 6653(a)(1) for 1988; and (4) whether petitioners are liable for additions to tax for substantial understatement of tax under section 6661 for each of the years 1987 and 1988.

On brief, respondent has conceded that certain additional deposits represent nontaxable items to petitioners and that the addition to tax under section 6661 no longer is applicable.

on. The facts pertinent to the disposition of this matter are summarized below. Background Respondent determined deficiencies in petitioners' Federal income taxes, an addition to tax, and a penalty as follows: Addition to Tax Penalty Year Deficiency Sec. 6661 Sec. 6662(a) 1988 $11,846.82 $2,961.71 --- 1990 10,076.82 --- $2,015.36 Duplicate notices of deficiency dated July 8, 1994, were sent to Fe Green (petitioner) and Joseph Green at 1503 Hastings Mill Road, Pittsburgh, Pennsylvania, and to P.O

at the end thereof the following new paragraph: "(3) Transitional Rule.--If-- "(A) a joint return under section 6013 of the Internal Revenue Code of 1954 was filed before January 1, 1985, "(B) on such return there is an understatement (as defined in section 6661(b)(2)(A) of such Code) which is attributable to disallowed deductions attributable to activities of one spouse, "(C) the amount of such disallowed deductions exceeds the taxable income shown on such return, "(D) without regard to any det

Therefore, for purposes of the section 6661 addition to tax, petitioners' understatement is reduced by that portion which relates to petitioners' section 1244 stock deduction.

MEMORANDUM FINDINGS OF FACT AND OPINION SWIFT, Judge: Respondent determined deficiencies in and additions to petitioners' 1988 Federal income taxes as follows: - 2 - Joseph E. Machado Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1) Sec. 6661 1988 $19,687 $4,441 $1,133 $4,922 Robert R. and Kerry S. Machado Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1) Sec. 6661 1988 $19,576 $3,889 $1,422 $4,894 Unless otherwise indicated, all section references are to the Inter

income. Also, petitioners showed the receipt of $1.5 million paid in connection with the settlement, but excluded the entire $1.5 million from their taxable income. The amounts were shown on the tax returns on a Form 8275, Disclosure Statement Under Section 6661. Respondent, in her notice of deficiency, increased petitioner’s income as shown on petitioners’ Federal income tax return for the year 1987 by the amount of $500,000, explained as a court-ordered award, and by the amount of $1,305,000,

aso, Texas, in November 1993. In the notice of deficiency respondent determined the following deficiencies in and additions to petitioner’s Federal income taxes: Additions to tax Sec. Sec. Sec. Year Deficiency 6653(b)(1) 6653(b)(1)(A) 6653(b)(1)(B) Sec. 6661(a) 1986 $58,761 $44,07 $14,690 1987 43,247 32,435 10,812 1988 156,393 $117,295 39,098 At trial, the parties made a number of concessions that dramatically reduce the deficiency amounts and additions to tax, including respondent’s concession

nuthos, Chief Special Trial Judge: Respondent determined deficiencies in and additions to the Federal income tax of Allen Powerstein and Rita Powerstein Rosen (petitioners) as follows: Additions to tax Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661 $28,664 $14,374 CD CD T"t ■ee-00 l-H Oi_ -e/3-00 a> T — I 48,948 24,474 £> CO ih o 1C of 1C 00 a 1“H Additions to tax Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661 $9,547 $38,186 $28,640 •e/3pT. © CD CXI CD 00 © 9,937 39,7