David Bruce McMahan - Page 6

                                                - 6 -6                                                   
            deficiency that determined an increase in taxable income as well                          
            as an addition to tax under section 6651(a)(1).  The amount of                            
            the increase in taxable income was settled by a Stipulation of                            
            Settlement dated October 18, 1994.  This settlement increased                             
            petitioner's taxable income by $1,536,047 and resulted in a                               
            revised tax liability of $924,111.                                                        
                  The parties have stipulated that the amount of the addition                         
            to tax under section 6651(a)(1), if it applies, is $141,028.                              
                                              OPINION                                                 
                  Section 6651(a)(1) imposes an addition to tax for failure to                        
            file an income tax return by the due date, including extensions,                          
            unless it is shown that the failure is due to reasonable cause                            
            and not due to willful neglect.  A failure to file in a timely                            
            manner is due to "reasonable cause" if the taxpayer exercised                             
            "ordinary business care and prudence" and was nevertheless unable                         
            to file the return within the time prescribed.  Sec. 301.6651-                            
            1(c)(1), Proced. & Admin. Regs.  The burden of proof is on the                            
            taxpayer.  Rule 142(a); Ehrlich v. Commissioner, 31 T.C. 536, 540                         
            (1958).  The issue before this Court is whether petitioner's                              
            reliance on his attorney to file an extension request constitutes                         
            ordinary business care and prudence and thus reasonable cause.                            
            I.    Petitioner Relied on Mr. Russell To File                                            
                  We must first determine whether petitioner relied on Mr.                            
            Russell.  We find that petitioner did so rely.                                            






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011