AMW Investments, Inc. - Page 28

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               For purposes of section 6662(a), "negligence” includes a               
          failure to make a reasonable attempt to comply with the Internal            
          Revenue Code, and "disregard" includes careless, reckless, or               
          intentional disregard.  Sec. 6662(c); sec. 1.6662-3(b)(1),                  
          Income Tax Regs.  Section 6664(c) provides a reasonable cause               
          exception to the accuracy-related penalty under section 6662.               
               Petitioner argues that it is within the exception under                
          section 6664(c).  Petitioner argues that it held an honest and              
          good faith belief about the deductibility of its payments for               
          legal fees and interest expense based on its reasonable reliance            
          on MBS to ensure tax compliance.  For the same reasons discussed            
          above, we disagree.  We sustain respondent on this issue.                   
               We have considered all of petitioner's arguments for                   
          contrary holdings and, to the extent not addressed above, find              
          them to be without merit.                                                   
               To reflect concessions by respondent,                                  
                                                  Decision will be entered            
                                             under Rule 155.                          

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Last modified: May 25, 2011