- 23 - 4(b) Accuracy-Related Penalties for 1989-92 Respondent determined that petitioners are liable for the accuracy-related penalties under section 6662(a) and (b)(1) for the taxable years 1989 through 1992.6 These sections impose a penalty equal to 20 percent of the portion of an underpayment of tax that is attributable to negligence or disregard of rules or regulations. "Negligence" includes any failure to make a reasonable attempt to comply with the provisions of the Code. Sec. 6662(c). As under prior law, failure to maintain records to substantiate an item constitutes negligence. Sec. 1.6662- 3(b)(1), Income Tax Regs. The penalty does not apply to any portion of an underpayment for which the taxpayer had reasonable cause and acted in good faith. Sec. 6664(c)(1). For the taxable years at issue, the penalty also may be avoided by making adequate disclosure of relevant information. Secs. 1.6662-1, -3(a), (c), Income Tax Regs. 5(...continued) petitioners credit for the amount of tax withheld. Mr. Kelly is plainly mistaken. For both 1986 and 1987 respondent properly computed the underpayment as the excess of the corrected tax liability over the net payment (amount withheld less amount refunded). See Woods v. Commissioner, 91 T.C. 88, 95-99 (1988). Mr. Kelly's challenge to the computation of the "underpayment" for purposes of the accuracy-related penalties for 1989-92 on the same ground is similarly without merit. See sec. 6664(a). 6By amendment to answer, respondent also asserted accuracy- related penalties under sec. 6662(b)(2). We need not consider the alternative theory.Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
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