7
Respondent determined that petitioners are liable for an
addition to tax for filing their 1990 Federal income tax return
after the due date. Section 6651(a)(1) provides for an addition
to tax in the amount of 5 percent of the amount of the tax if the
failure to file is for not more than 1 month, with an additional
5 percent for each month in which the failure to file continues,
not exceeding 25 percent of the tax in the aggregate. The
addition to tax is applicable unless it is shown that the failure
to file is due to reasonable cause and not willful neglect.
Respondent contends that petitioners' 1990 tax return was
due on April 15, 1991, and that the return was not filed until
August 19, 1991. Petitioners maintain that they had an automatic
extension of time to file their tax return. While it is true
that petitioner filed an application for an automatic extension
of time, respondent contends that the application is invalid
because petitioners failed to estimate properly their tax for
1990 when they filed their Form 4868. Sec. 1.6081-4(a)(4),
Income Tax Regs.
On their application for extension, petitioners estimated
their 1990 tax liability, without taking into consideration their
gambling losses, to be $13,660. After deducting taxes withheld
of $11,847, petitioner remitted a check to the IRS in the amount
of $1,813. In the notice of deficiency, respondent determined
that petitioners' 1990 tax liability was $13,824. The deficiency
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