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OTHER ASPECTS OF DEDUCTIBLE GIVINGThe term negligence is defined for this purpose as including “any failure tomake a reasonable attempt to comply with” the applicable law. 223 The term disregardincludes “any careless, reckless, or intentional disregard.” 224A substantial understatement occurs when the amount of the understatementof tax for the year exceeds the greater of 10 percent of the tax that is required or$5,000. 225 When the violation is by a regular corporation, the penalty is thegreater of 10 percent of the required tax or $10,000. 226 The term understatementmeans the excess of: (1) the amount of tax required to be shown on the taxreturn for a taxable year over (2) the amount of tax imposed, which is shown onthe tax return, less certain rebates. 227 These rules apply with respect to tax shelters;that term is defined to include any “plan or arrangement” (including apartnership) if the “principal purpose” of it “is the avoidance or evasion of Federalincome tax.” 228An income tax substantial valuation misstatement generally occurs if the valueof any property (or the adjusted basis of any property) claimed on a tax return is200 percent or more of the amount determined to be the correct amount of thevaluation (or adjusted basis). 229 For this penalty to be imposed, the substantialmisstatement must exceed $5,000 ($10,000 for most corporations). 230This penalty may be increased in the event of a gross valuation misstatement,which is an amount equal to 40 percent of the portion of the underpayment. 231An income tax gross valuation misstatement generally occurs if the value of anyproperty (or the adjusted basis of any property) claimed on a tax return is 400percent or more of the amount determined to be the correct amount of the valuation(or adjusted basis). 232There is a substantial estate or gift tax valuation understatement if the value ofany property claimed on a tax return is 50 percent or less of the amount determinedto be the correct amount of the valuation. 233 This penalty applies when theunderpayment exceeds $5,000. 234 A gross valuation misstatement in this contexttakes place if the value of any property claimed on a tax return is 25 percent orless of the amount determined to be the correct amount of the valuation. 235There is a fraud penalty, which is an addition to the tax of an amount equalto 75 percent of the portion of the underpayment that is attributable to fraud. 236If the IRS establishes that any portion of an underpayment is attributable tofraud, the entire underpayment is treated as attributable to fraud, except with223 IRC § 6662(c).224 Id.225 IRC § 6662(d)(1)(A).226 IRC § 6662(d)(1)(B).227 IRC § 6662(d)(2). In this context, a rebate is an abatement, credit, refund, or like payment made on the groundthat the tax imposed was less than the tax deficiency initially determined. IRC § 6211(b)(2).228 IRC § 6662(d)(2)(C)(ii)(III).229 IRC § 6662(e)(1)(A).230 IRC § 6662(e)(2).231 IRC § 6662(h)(1).232 IRC § 6662(h)(2)(A)(i).233 IRC § 6662(g)(1).234 IRC § 6662(g)(2).235 IRC § 6662(h)(2)(C).236 IRC § 6663(a). 388