Kathleen A. Brown - Page 15

                                       - 15 -                                         

          payments would be itemized deductions or some other type of                 
          adjustment if they had been proven.                                         
               The testimony shows that, except for failing to reduce                 
          petitioner's tips for "payouts" to busboys and other employees,             
          respondent's computation of petitioner's tip income is                      
          reasonable.  In fact, petitioner, though not stating that she               
          accepted it, did not truly question the amounts respondent showed           
          for various items.  She, herself, thought the difference in her             
          records and respondent's computation was due to the amount of the           
          tips she passed on to others in the restaurant who also served              
          the customers and amounts she paid for breakage and other items.            
          Certainly these differences in method of computation of tip                 
          income account for a substantial portion of the difference in               
          petitioner's and respondent's computations.                                 
               In our view, petitioner has shown that she should not be               
          held liable in either year here in issue for the accuracy-related           
          penalty under section 6662.  Although respondent did not state              
          what subsection of section 6662 she contended required the                  
          penalty, it is apparent that the penalty must have been intended            
          as one for negligence.  Petitioner had her tax returns prepared             
          by a preparer she considered competent.  She kept records in a              
          way she believed to be in accordance with the instructions from             
          her return preparer.  Certainly for someone with petitioner's               
          lack of tax knowledge, it would be normal to expect that her tips           





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011