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rendered. Petitioner correctly included it as income on her
Federal tax return. Had the cost of petitioner’s temporary
lodging amounted to a qualified moving expense, her entitlement
to a deduction would not have been eliminated because Authentic
Fitness paid her a bonus described as a “Total Tax Liability
Gross-Up”. Therefore, the payment to petitioner is income, and
that payment does not affect the character of the other payments
related to petitioner's move.
Respondent determined a section 6662(a) penalty against
petitioner in the amount of $741.12. Section 6662(a) provides
for a 20-percent penalty for any underpayment to which the
section applies. Respondent determined that section 6662(b)
applied to petitioner because petitioner was negligent or
disregarded rules or regulations.
Negligence is defined as “any failure to make a reasonable
attempt to comply with the provisions of this title.” Disregard
includes “careless, reckless, or intentional disregard”. Sec.
6662(c). Although respondent bears the burden of production
under section 7491(c), petitioner must still show she had
reasonable cause to believe her deduction was correct. The Court
holds that petitioner was negligent in claiming part of her
moving expenses as deductible.
Petitioner filed her 2001 Federal income tax return on April
10, 2002. She received a letter on or about February 10, 2002,
from Warnaco explaining the items on her Form W-2. The expense
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Last modified: May 25, 2011