### Question
What does understatement mean?


### Answer
**Understatement** has the following meaning in *26 U.S.C. § 6662*:

> the excess of—


(i) the amount of the tax required to be shown on the return for the taxable year, over


(ii) the amount of the tax imposed which is shown on the return, reduced by any rebate (within the meaning of section 6211(b)(2))

#### Citation:
  - *26 U.S.C. § 6662*
  - Heading: **Subtitle F-Procedure and Administration > CHAPTER 68-ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES > Subchapter A-Additions to the Tax and Additional Amounts > PART II-ACCURACY-RELATED AND FRAUD PENALTIES**

