- 15 -
We consider the facts and circumstances in deciding whether
the taxpayer acted with reasonable cause and in good faith. Sec.
6664(c)(1); sec. 1.6664-4(b)(1), Income Tax Regs. We
conclude that petitioner acted in good faith and was not
negligent in claiming that the 1996 lottery winnings were
nontaxable because, when he filed his 1996 return, petitioner
reasonably believed that the lottery winnings he received in 1996
were nontaxable.
The taxpayer must disclose an item or a position on a return
on a Form 8275, Disclosure Statement, or a Form 8275-R,
Regulation Disclosure Statement, attached to the return (or a
qualified amended return). Sec. 1.6662-3(c), Income Tax Regs.
Petitioner adequately disclosed on Form 8275 attached to his 1986
return the facts relevant to the lottery winnings, and he had a
reasonable basis for his position relating to those winnings. In
contrast, petitioner did not disclose facts relating to, or have
a reasonable basis for, his treatment of the net operating loss
carryover. We conclude that petitioner is not liable for the
accuracy-related penalty with respect to his lottery winnings but
is liable for that penalty with respect to his net operating loss
carryover.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011