Taxpayers received a Form 1099-MISC reporting $3.4 million in income. This income item never made it to the income tax return. The IRS noted the missing item and assessed tax on it, and an accuracy-related penalty under Code §6662(a) of $104,295. That Code section imposes a 20% penalty on substantial understatements of income tax.
The taxpayers had engaged a specialty firm to prepare their income tax return. The return was over 115 pages long, and involved the integration of 160-plus information returns.
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