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business. We hold that the amounts claimed are not deductible as
ordinary and necessary business expenses.
The second issue for decision is whether petitioner is
liable for the section 6651(a)(1) addition to tax for 1992.
Section 6651(a)(1) imposes an addition to tax for failure to
timely file a return, unless the taxpayer establishes that such
failure is due to reasonable cause and not due to willful
neglect. "Reasonable cause" requires the taxpayer to demonstrate
that she exercised ordinary business care and prudence and was
nonetheless unable to file a return within the prescribed time.
United States v. Boyle, 469 U.S. 241, 245-246 (1985). "Willful
neglect" means a conscious, intentional failure or reckless
indifference. Id. at 246. The addition to tax equals 5 percent
of the tax required to be shown on the return if the failure to
file is for not more than 1 month, with an additional 5 percent
for each additional month or fraction of a month during which the
failure to file continues, not to exceed a maximum of 25 percent.
Sec. 6651(a)(1).
Petitioner's 1992 return was due on April 15, 1993. Sec.
6072(a). She applied for and received an automatic, 4-month
extension of time to file, until August 16, 1993.4 Sec. 6081;
sec. 1.6081-4, Income Tax Regs. Petitioner's return was not
received by respondent until November 9, 1994.
4 Since Aug. 15, 1993, fell on a Sunday, petitioner was
allowed an extra day to file the return. Sec. 7503.
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