Harry D. Bledsoe and Annie L. Bledsoe - Page 21

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            for the vaults was discovered after the returns in question were                            
            filed, and it was raised during the administrative audit.  The                              
            accountant conducted a random sampling of the universe of                                   
            invoices and was able to arrive at an average cost of $150 per                              
            vault.  He also was able to determine that the average cost to                              
            install the vaults should have been $50 each.  Through this                                 
            methodology, it was established that the corporation had an                                 
            $800,000 (4,000 x $200) unrecorded liability.                                               
                  Petitioners have carried their burden of showing the                                  
            existence of Resthaven's unrecorded burial vault liability of                               
            $800,000.  Consequently, petitioners did not receive dividend                               
            income in the amounts determined by respondent during the years                             
            in issue.                                                                                   
                  Respondent determined that petitioners are liable for                                 
            additions to tax and a penalty for negligence or intentional                                
            disregard of rules or regulations during the years at issue,                                
            under their respective sections in 1987, 1988, and 1989.                                    
            Petitioners have the burden of showing that they were not                                   
            negligent with respect to their tax returns at issue.  Rule                                 
            142(a); Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).                                 
                  Negligence is a "lack of due care or failure to do what a                             
            reasonable and ordinarily prudent person would do under the                                 

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