- 12 -
Section 6662(a)
Respondent determined that petitioners are liable for the
section 6662(a) penalty for 1989. Section 6662(a) imposes a
penalty in an amount equal to 20 percent of the underpayment of
tax attributable to one or more of the items set forth in section
6662(b). In the notice of deficiency, respondent based the
determination of the section 6662(a) penalty on petitioners’
underpayment's being due to a substantial understatement. See
sec. 6662(b)(2).
The accuracy-related penalty does not apply with respect to
any portion of an underpayment if it is shown that there was
reasonable cause for such portion of an underpayment and that
petitioners acted in good faith with respect to such portion.
Sec. 6664(c)(1). The determination of whether petitioners acted
with reasonable cause and in good faith depends upon the
pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income
Tax Regs.
The underpayment of petitioners' tax for 1989 was
substantial in that it totaled almost $38,000. Because they
failed to show how the amount paid with their request for
extension was estimated, petitioners also failed to show that
they acted in good faith with respect to the underpayment. See
sec. 6662(d)(1)(A). Respondent’s determination that petitioners
are liable for the section 6662(a) penalty for 1989 will be
sustained.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011