- 12 -
deductions.9 Therefore, we hold that petitioners are not
entitled to deduct the charitable contributions for 1998 and
1999, and we sustain respondent’s determination on this issue.
III. Section 6662 Penalties for Negligence and Substantial
Understatement of Tax
Respondent determined that for 1998 and 1999 petitioners are
liable for accuracy-related penalties for negligence and for
substantial understatement of income tax. Petitioners contend
that they are not liable for the accuracy-related penalties for
negligence or substantial understatement of income tax because
respondent allowed deductions of the asserted 1975 NOL
carryforward on amended individual Federal income tax returns in
years before 1998.
Section 6662(a) and (b)(1) imposes an accuracy-related
penalty equal to 20 percent of any portion of an underpayment
attributable to negligence or disregard of rules or regulations.
The term “negligence” is defined in section 6662(c) as “any
failure to make a reasonable attempt to comply with the
provisions of * * * [the Internal Revenue Code]”. The term
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c); sec. 1.6662-3(b)(2), Income Tax Regs.
9Petitioners’ only argument with respect to this issue is
that it would be reasonable to allow them to deduct charitable
contributions of $420, even without proper documentation, since
they have already substantiated charitable contributions in
excess of $10,000 for each year.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011