The definition of underpayment also may be expressed as-
Underpayment = W - (X + Y - Z),
where W = the amount of income tax imposed; X = the amount shown as the tax by the taxpayer on his return; Y = amounts not so shown previously assessed (or collected without assessment); and Z = the amount of rebates made.
Tax imposed under subtitle A | $25,500 | |
Tax shown on return | $18,000 | |
Tax previously assessed (or collected without assessment) | None | |
Amount of rebates made | None | |
Balance | $18,000 | |
Underpayment | $7,500 |
Tax imposed under subtitle A | $25,500 | |
Tax shown on return | $18,000 | |
Tax previously assessed (or collected without assessment) | 1,500 | |
Amount of rebates made | None | |
Balance | $19,500 | |
Underpayment | $6,000 |
Tax imposed under subtitle A | $10,000 | |
Tax shown on return | $2,000 | |
Tax previously assessed (or collected without assessment) | None | |
Amount of rebates made | None | |
Balance | $2,000 | |
Underpayment | $8,000 |
26 C.F.R. §1.6664-2