GERBER, Judge: Respondent determined a $19,748 income tax deficiency and a $3,950 accuracy-related penalty under section 6662(a) for petitioner's 2006 tax year. The issues presented for our consideration are whether petitioner is required to report certain interest income for 2006 and whether petitioner is liable for a section 6662(a) penalty.

Petitioner maintained dual citizenship in the United States and Israel and at all times pertinent to this case resided in California, including the time his petition was filed. During 2006 petitioner was retired, and his sources of income were interest on certificates of deposit (CDs) and Social 2010 Tax Ct. Memo LEXIS 226">*227 Security benefits. For 2006 petitioner reported $53,051 of interest and $4,748 of Social Security benefits as income.

During 2006 and in prior years, petitioner earned interest income by investing in CDs. It was his practice to seek out the best possible interest rates. He would move his money from institution to institution seeking more favorable rates at the end of the holding period of his current CDs.

The CDs were generally of 9- or 12-month duration. The terms of the CDs provided for a penalty if funds were withdrawn before the maturity date of the certificate. At the end of each calendar year accumulated interest was credited to the CD balance, and petitioner was sent notification in a Form 1099-INT, Interest Income, reflecting the interest that had accrued on his certificate. The accumulated interest that was credited to his CD account would then accrue interest in addition to the original principal. On occasions where petitioner withdrew his funds before maturity, he was penalized. On one such occasion (not during 2006), some of the institutions holding his CDs became unstable and appeared unable to meet their obligations. Petitioner was then forced to withdraw before maturity, 2010 Tax Ct. Memo LEXIS 226">*228 and the early withdrawal penalty eliminated some portion of the accumulated interest that had been earned on the certificates.

For each year, including 2006, petitioner would report the amount reflected on the Forms 1099-INT only if the underlying CD had matured during that year. On the basis of that approach petitioner reported $53,051 of interest income for 2006. Conversely, respondent received notification of the issuance of Forms 1099-INT for petitioner reflecting interest in the total amount of $126,676 or a difference of $73,625 resulting in a $19,748 income tax deficiency for 2006.

A notice of deficiency was issued to petitioner, and he petitioned this Court.

We consider whether petitioner was required to report the interest credited to his CD accounts even though, as he contends, they remained subject to a penalty for early withdrawal. Gross income comprises all income including interest income. Sec. 61(a)(4). In some cases involving unreported income, the Commissioner must introduce evidence that reflects that a taxpayer received income that was not reported. Hardy v. Commissioner, 181 F.3d 1002">181 F.3d 1002, 181 F.3d 1002">1004 (9th Cir. 1999), affg. T.C. Memo. 1997-97. Respondent introduced certified 2010 Tax Ct. Memo LEXIS 226">*229 documents reflecting that the Internal Revenue Service had been informed that Forms 1099-INT had been issued to petitioner for the interest income that was not included on petitioner's 2006 tax return. Accordingly, petitioner has the burden of showing that respondent's determination is in error.

There is no question that accrued interest was credited to petitioner's CD accounts as of the end of the 2006 calendar year. The only question petitioner raises is whether the potential for a penalty if the interest or principal had been withdrawn early is a restriction that would render the interest not subject to tax. Petitioner's argument is addressed in section 1.451-2, Income Tax Regs.³That regulation provides that a taxpayer is not in constructive receipt of income if the taxpayer's control of its receipt is subject to "substantial limitations or restrictions." Sec. 1.451-2(a), Income Tax Regs. In the case of interest, dividends, or other earnings on deposits in a bank or similar institution, section 1.451-2(a)(2), Income Tax Regs., provides that the following is not a substantial limitation or restriction on the taxpayer's control over the receipt of such earnings:

The fact that the 2010 Tax Ct. Memo LEXIS 226">*230 taxpayer would, by withdrawing the earnings during the taxable year, receive earnings that are not substantially less in comparison with the earnings for the corresponding period to which the taxpayer would be entitled had he left the account on deposit until a later date (for example, if an amount equal to three months' interest must be forfeited upon withdrawal or redemption before maturity of a one year or less certificate of deposit, time deposit, bonus plan, or other deposit arrangement then the earnings payable on the premature withdrawal or redemption would be substantially less when compared with the earnings available at maturity);