Case: Supervisory Approval for Substantial Underpayment Penalty Properly Secured (T.C.) (IRC §6751)

The United State Tax Court concluded that the Commissioner of Internal Revenue had demonstrated compliance with I.R.C. §6751(b)(1) in approving a 20 percent substantial underpayment penalty, granting the Commissioner’s motion for partial summary judgment and denying taxpayer’s motion. The Commissioner disallowed a $651 million capital loss deduction and asserted a 20 percent penalty. The taxpayer petitioned the Tax Court to set aside the penalty because the agent’s supervisor failed to engage in reasoned decision making under the Administrative Procedure Act (APA) by not considering whether the taxpayer had a reasonable basis defense. The Tax Court rejected the taxpayer’s arguments finding ...