Harry T. Cavalaris - Page 30

                                       - 30 -                                         

          with reasonable cause or in good faith is made on a case-by-case            
          basis.  Sec. 1.6664-4(b)(1), Income Tax Regs.  Isolated                     
          computational or transcriptional errors are not inconsistent with           
          reasonable cause and good faith.  Id.                                       
               Generally, with respect to the portion of the understatement           
          attributable to petitioner's disallowed charitable contribution             
          deductions, petitioner's errors did not rise to the level of                
          negligence.  With few exceptions, petitioner substantiated the              
          deductions claimed.  The disallowance of many of the deductions             
          turned on the resolution of a difficult factual question, such as           
          valuation, reasonableness, or the meaning of "personal pleasure,            
          recreation, or vacation".                                                   
               Despite our general finding, we conclude that petitioner was           
          negligent with respect to certain items deducted as charitable              
          contributions.  The "sleep or rest rule" is well settled law.               
          Accordingly, we conclude petitioner carelessly disregarded the              
          rules and regulations by deducting $25 for meal expenses on a 1-            
          day trip in violation of this rule.  The prohibition on the                 
          deduction of personal expenses is equally well settled.  We again           
          conclude petitioner carelessly disregarded the rules and                    
          regulations by deducting personal expenses.  This finding relates           
          to petitioner's deductions for gratuities and taxes attributable            
          to spa services and the extra tank of gasoline, discussed above.            
          We exclude from this finding the $100 petitioner paid for an auto           





Page:  Previous  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  Next

Last modified: May 25, 2011