Rand, et al. v. Comr., 141 T.C. 12 (2013)

(petitioner’s return had zero tax liability but claimed refundable   credits which triggered refund of $7,327; IRS issued refund, but later recomputed and determined that petitioner owed $144 (petitioner had to repay the $7,327 and an additional $144) and assessed penalty of $1,494.20 (20% underpayment penalty); petitioner challenged IRS position that refundable credit counted as an “underpayment”; court noted that accuracy-related penalty is on deficiencies based on how much the taxpayer underpaid the “tax required to be shown on the return” and determined that refundable credits cannot take the tax below zero for purposes of the accuracy-related penalty; thus, underpayment was $144 for penalty computation purposes).