Frederick Smith, Jr. and Vanessa Smith - Page 11




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          the provisions of the Code.  Sec. 6662(c).  “Disregard” includes            
          any careless, reckless, or intentional disregard.  Id.                      
               The penalties provided for in section 6662 will not be                 
          imposed with respect to any portion of an underpayment if it is             
          shown that there was reasonable cause for such portion and that             
          the taxpayer acted in good faith with respect to such portion.              
          Sec. 6664(c)(1).  Whether the taxpayer has acted with reasonable            
          cause and in good faith is determined by relevant facts and                 
          circumstances, including the taxpayer’s own efforts to assess his           
          proper tax liability.  Stubblefield v. Commissioner, T.C. Memo.             
          1996-537; sec. 1.6664-4(b), Income Tax Regs.                                
               There is no support in this record that the payment                    
          petitioners received was a loan.  There is nothing in the record            
          that indicates that the underpayment was due to reasonable cause            
          or that petitioners acted in good faith.  Respondent is sustained           
          on this issue.                                                              
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   
               To reflect the foregoing,                                              
                                             Decision will be entered                 
                                        for respondent.                               











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