[§231-36.6]  Substantial understatements ormisstatements of amounts; penalty.  (a)  There shall be added to the tax anamount equal to twenty per cent of the portion of any underpayment that isattributable to any substantial understatement of any tax in a taxable year. The penalty under this section shall be in addition to any other penaltyassessable by law.

(b)  Except as provided under subsection (c),there is a substantial understatement of tax for any taxable year if the amountof the understatement for the taxable year exceeds the greater of:

(1)  Ten per cent of the tax required to be shown onthe return for the taxable year; or

(2)  $1,500.

(c)  In the case of a corporation other than acorporation taxable under subchapter S of the Internal Revenue Code, there is asubstantial understatement of tax for any taxable year if the amount of theunderstatement for the taxable year exceeds the greater of:

(1)  Ten per cent of the tax required to be shown onthe return for the taxable year; or

(2)  $30,000.

(d)  The amount of any understatement shall bereduced by that portion of the understatement that is attributable to:

(1)  The tax treatment of any item by the taxpayer ifthere is or was substantial authority for such treatment; or

(2)  Any item if the relevant facts affecting theitem's tax treatment are adequately disclosed in the return or in a statementattached to the return and there is a reasonable basis, as defined undersection 231‑36.8, for the tax treatment by the taxpayer.

The reduction in this subsection shall not apply toany item attributable to a tax shelter as described in section 231‑36.7.

(e)  This section shall be construed inaccordance with regulations and judicial interpretations given to section 6662of the Internal Revenue Code.

(f)  For purposes of this section,"understatement" means the excess of:

(1)  The amount of tax required to be shown on thereturn for the taxable year; over

(2)  The amount of tax imposed that is shown on thereturn, reduced by any rebate as that term is defined by section 6211(b)(2) ofthe Internal Revenue Code. [L 2009, c 166, §4]

 

Note

 

  Applicability of 2009 amendment.  L 2009, c 166, §27.