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6015(b) is available to electing joint filers when there is a tax understatement attributable to erroneous items of the other party if the electing individual establishes that he or she did not know of the understatement and had no reason to know of the understatement.
In response, the Treasury and IRS developed regulations under section 6011 requiring extensive disclosures of reportable transactions that might be indicative of tax shelter transactions; Congress, for its part, enacted sections 6662A and 6707A, which penalize taxpayers for tax understatements attributable to reportable transactions and for failing to disclose reportable transactions, respectively.
With respect to understatements of tax resulting from disallowed deductions, the Tax Court held that the knowledge standard under [section] 6015(c) requires the Service to prove that the taxpayer had actual knowledge of the factual circumstances which made the item unallowable as a deduction.
Further, a taxpayer could use the defense only for understatements of deductions or credits that exceeded a specified percentage of the innocent spouse's adjusted gross income.
Tax preparer penalties--the focus of this article--have been stiffened and the preparer's scope of liability has been broadened, particularly for understatement due to unrealistic positions and willful or reckless conduct.
Correction of the understatement is not expected to increase the Company's liability to vendors, who will continue to be paid on a timely basis.
A substantial estate or gift tax valuation understatement (Sec.
The new provisions relax the eligibility requirements for innocent spouse status, eliminating the dollar understatement thresholds and changing the standard to "erroneous" understatements rather than "grossly" erroneous ones; in addition, the new provisions expressly make "partial rebel" available.
Similar penalties for understatements of tax due to the deduction of overvalued pension liabilities were added for overstatements after October 22, 1986 [TRA Sec.
When the understatements were initially identified, the company immediately began a thorough investigation of the cause and extent of the understatements.
6662A, which generally imposes a similar accuracy-related penalty on understatements attributable to "reportable transactions.
Taxpayers are subject to an "accuracy-related" penalty for understatements under section 6662 of the Code.