Pennel Phlander Irwin - Page 20

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            underpayment attributable to a taxpayer's negligence or disregard                             
            of rules and regulations.  Sec. 6662(a), (b)(1).  The term                                    
            "negligence" includes any failure to do what a reasonable and                                 
            ordinarily prudent person would do under the same circumstances.                              
            Neely v. Commissioner, 85 T.C. 934, 947 (1985).  The term                                     
            "disregard" includes any careless, reckless, or intentional                                   
            disregard.  Sec. 6662(c).  The penalty does not apply to any                                  
            portion of an underpayment for which there was reasonable cause                               
            and with respect to which the taxpayer acted in good faith.  Sec.                             
            6664(c).  Respondent's determination imposing the accuracy-                                   
            related penalty is presumed correct, and taxpayers bear the                                   
            burden of proving that they are not liable for the accuracy-                                  
            related penalty imposed by section 6662(a).  Rule 142(a);                                     
            Tweeddale v. Commissioner, 92 T.C. 501, 505 (1989).                                           
                  While petitioner may honestly believe that he is entitled to                            
            deductions for the expenses in question, his position is not                                  
            reasonable under the circumstances.  Prudent individuals in                                   
            petitioner's position would be aware that engaging in the trade                               
            or business of a writer does not transform personal expenses into                             
            deductible business expenses, simply because "life's experiences"                             
            are incorporated into their literary materials.  Additionally,                                
            petitioner offered little evidence to substantiate the business                               
            relationship between the expenses and his literary activities.                                
            Petitioner has not met his burden of proof with respect to the                                






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Last modified: May 25, 2011