- 13 -
technical legal sense, these terms denote activities inconsistent
with the use of Schedule C for reporting of losses, see, e.g.,
Kemon v. Commissioner, 16 T.C. 1026, 1032-1033 (1951); Kelly v.
Commissioner, T.C. Memo. 1996-529, and might therefore suggest a
potential controversy. But inasmuch as respondent had no way of
ascertaining whether these terms were being used as legal terms
of art or in some nontechnical sense, these terms could not serve
as a substitute for disclosure of the fact that petitioner was
reporting losses from the sale of property that he had not held
as inventory or primarily for sale to customers. Cf. Lester v.
Commissioner, T.C. Memo. 1995-317. Petitioners did not
adequately disclose any items contributing to the substantial
understatements for the years at issue.
Petitioners' second argument is that respondent should have
waived the additions to tax for substantial understatement
because the errors on their returns (or most of them) were the
result of reasonable and good faith reliance upon the mistaken
judgments of their accountant. See sec. 1.6661-6(b), Income Tax
Regs. Respondent's failure to waive the addition to tax under
section 6661 is reviewable by this Court for abuse of discretion.
Mailman v. Commissioner, 91 T.C. 1079, 1083-1084 (1988). In
order to establish abuse of discretion, the taxpayer must
demonstrate that he specifically requested a waiver or otherwise
presented his claim to respondent at some time during the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011