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original extension request. Federal taxes totaling $12,000 had
been withheld from petitioners' income during 1989, but
petitioners did not include any additional payment of taxes with
their initial 1989 extension application. On their 1989 return,
filed in October 1990, petitioners calculated their adjusted
gross income to be $268,689.71 and their total tax liability to
be $59,903.15.
Petitioners failed to offer any evidence that would explain
how they computed their tax liability for purposes of the
extension request, on which their tax liability was
underestimated by more than $47,000. Petitioners argue that
reasonable cause existed for their failure to estimate properly
because their tax records for 1989 were unavailable due to
pending litigation with Mr. Hanna’s former business associate.
Inability to obtain information does not generally constitute
reasonable cause if taxpayers could have filed a timely return
with a reasonable degree of accuracy based on their best
knowledge. See Estate of Vriniotis v. Commissioner, 79 T.C. 298,
311 (1982); Electric & Neon, Inc. v. Commissioner, 56 T.C. 1324,
1343 (1971), affd. without published opinion 496 F.2d 876 (5th
Cir. 1974). In this case, Mr. Hanna presented no evidence that
his law practice income or that Mrs. Hanna’s income had decreased
in any amount from prior years, such as 1987 and 1988, when
petitioners' adjusted gross income had been $190,280.08 and
$254,374.46, respectively. There is also no evidence that
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