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underpayment if it is shown that there was reasonable cause for
such portion of the underpayment and that the taxpayers acted in
good faith with respect to such portion. Sec. 6664(c)(1). The
determination of whether the taxpayers acted with reasonable
cause and in good faith depends upon the pertinent facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. The most
important factor is the extent of the taxpayers’ effort to assess
their proper tax liability for the taxable year. Id.
After carefully examining the record, we find no basis on
which we can find that petitioners had substantial authority,
that they adequately disclosed the relevant facts concerning the
items on their tax return, or that they acted with reasonable
cause and in good faith with respect to any portion of the
understatement determined by respondent. We have considered all
of petitioners’ arguments on this point and find them to be
without merit. On the instant record, we sustain respondent’s
determination that petitioners are liable for the accuracy-
related penalty with respect to their entire underpayment of tax
for 1990.
To reflect the foregoing, and to take into account
concessions made,
An appropriate order will be
issued and decision will be
entered under Rule 155.
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Last modified: May 25, 2011