Modifications of substantial understatement penalty for nonreportable transactions.

AuthorManning, Paul

Before the AJCA, a 20% accuracy-related penalty applied to any substantial tax understatement. A "substantial understatement" existed if the correct income tax liability for a tax year exceeded that reported by the taxpayer by the greater of 10% of the correct tax or $5,000 ($10,000 in the case of most corporations); see Sec. 6662(a) and (d)(1)(A).

New Law

AJCA Section 819 modifies the Sec. 6662 definition of "substantial" for corporate taxpayers, to provide that there is a substantial understatement...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT