Deja Vu, Inc. - Page 19

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          care, and it failed to do what a reasonable and ordinarily                  
          prudent person would have done under the circumstances.                     
          Petitioner knew it was required to file timely a Federal income             
          tax return for each year in issue, but it neglected to do so for            
          its 1989 taxable year.  Given the fact that taxpayers have a                
          statutory duty to file timely income tax returns, we believe that           
          a reasonable and ordinarily prudent person would have complied              
          with the statutory duty to file timely such a return.  We also              
          believe that breach of this duty is evidence of negligence.                 
          Condor Intl., Inc. v. Commissioner, 98 T.C. 203, 225 (1992),                
          affd. in part, revd. in part 78 F.3d 1355 (9th Cir. 1996);                  
          Emmons v. Commissioner, 92 T.C. 342, 349 (1989), affd. 898 F.2d             
          50 (5th Cir. 1990).  The fact that petitioner was negligent in              
          the instant case is also supported by the fact that petitioner              
          erroneously claimed deductions for the interest expenses and its            
          shareholder’s legal fees.  See Condor Intl., Inc., v.                       
          Commissioner, supra at 225; Emmons v. Commissioner, supra at 349.           
          We sustain respondent on this issue.                                        
               We have considered all of petitioner's arguments for                   
          contrary holdings and, to the extent not addressed above, find              
          them to be without merit.                                                   
               To reflect concessions by respondent,                                  
                                                  Decision will be entered            
                                             under Rule 155.                          

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