Opinion ID: 769343
Heading Depth: 2
Heading Rank: 4

Heading: Accuracy-Related Penalties under I.R.C.S 6662(a)

Text: 45 Under I.R.C. S 6662(a) and (b)(2), a penalty of 20 percent of the portion of underpayment of taxes is imposed for substantial understatement 19 of income tax. The penalty applies only if there is no substantial authority for the understatement. See Treas. Reg. S 1.6662-4(a).The Commissioner imposed a penalty for the deduction of the $650,000 in acquisition costs of Cruze's stock. As demonstrated above, Custom Chrome has not cited any authority whatsoever -much less substantial authority -for its position. See Norgaard v. Commissioner, 939 F.2d 874, 880-81 (9th Cir. 1991) (There is substantial authority for the tax treatment of an item only if the weight of the authorities supporting the treatment is substantial in relation to the weight of authorities supporting contrary positions.). Thus, the Tax Court did not err in upholding the Commissioner's penalty assessment 20 .