- 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 tipsPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011