Imposition of accuracy-related penalty.

For purposes of this section, the term: “Negligence” means a failure to make a reasonable attempt to comply with the provisions of this title or to exercise ordinary and reasonable care in the preparation of a tax return without the intent to defraud. A position with respect to an item is attributable to negligence if it lacks a reasonable basis. Negligence is indicated where: The taxpayer fails to include on an income tax return an amount of income shown on an information return; The taxpayer fails to make a reasonable attempt to ascertain the correctness of a deduction, credit, or exclusion on a return; or The taxpayer fails to keep adequate books and records or to substantiate items properly. “Gross valuation misstatement” means the reporting on any return for a tax imposed by this title of the value of a property or the adjusted basis of a property which is greater than or equal to 400%, or less than or equal to 25%, of the amount determined to be the correct amount of the valuation or adjusted basis. “Substantial understatement of income tax” means, for a taxable year, an understatement made by taxpayer in filing an individual or estate tax return if the amount of the understatement for the taxable year exceeds the greater of: Ten percent of the tax required to be shown on the return for the taxable year; or $2,000. In the case of a taxpayer other than an individual or estate, subparagraph (A) of this paragraph shall be applied by substituting “$4,000” for “$2,000”. For purposes of this section, the term “understatement” means the excess of the amount of tax required to be shown on a return less the tax shown on the return. The amount of the understatement under sub-subparagraph (i) of this paragraph shall be reduced by the portion of the understatement which is attributable to: The tax treatment of an item by the taxpayer if there is or was substantial authority for the treatment; or An item if: The relevant facts affecting the item’s tax treatment are adequately disclosed in a statement attached to the return; and There is a reasonable basis for the tax treatment of the item by the taxpayer. “Substantial valuation misstatement” means the reporting on any return for a tax imposed by this title of the value of a property or the adjusted basis of a property which is greater than or equal to 200%, or less than or equal to 50%, of the amount determined to be the correct amount of the valuation or adjusted basis. There shall be added to a tax imposed by this title an amount equal to 20% of the portion of an underpayment which is attributable to one or more of the following: Negligence; A substantial understatement of income tax; or A substantial valuation misstatement. There shall be added to the tax imposed by this title an amount equal to 40% of the portion of an underpayment which is attributable to a gross valuation misstatement. Subsection (b) of this section shall not apply to the portion of an underpayment on which a penalty is imposed under § 47-4212. No penalty shall be imposed under subsection (b) of this section by reason of a substantial valuation misstatement or a gross valuation misstatement unless the portion of the underpayment for the taxable year attributable to the substantial valuation misstatement exceeds $5,000 ($10,000 in the case of a corporation).