- 16 -
are no constructive dividends to the individual petitioners; and
(3) the accuracy-related penalties under section 6662(a) relating
to this issue are not applicable.
The remaining issues for decision are: (1) Whether the Lestes
and the Moores are liable for accuracy-related penalties under
section 6662(a) for their failure to properly report bonus income
received from FAMC, and (2) whether FAMC is liable for the section
6662(a) accuracy-related penalty for claiming cost of goods sold of
$202,525 which the parties have agreed was improper.
Section 6662(a) imposes a penalty on any portion of an
underpayment that is attributable to negligence or disregard of
rules and regulations. In the instant case, petitioners have
conceded that they are liable for the underlying deficiencies
resulting from the improperly reported bonus income and cost of
goods sold amounts.
A taxpayer must establish error in the Commissioner's
determination that he or she is liable for the penalty provided by
section 6662(a). Rule 142(a); Estate of Monroe v. Commissioner,
104 T.C. 352, 366 (1995). Petitioners offered no evidence at trial
concerning the negligence penalties and failed to address the issue
8(...continued)
Silbernagel under the consulting and noncompetition agreement
were his "fully earned draw" and that he could earn more but not
less than the agreed $15,000 per month "floor". As noted
previously, respondent did not challenge Silbernagel's assertion
that he reported all of the consulting fees received from FAMC as
ordinary income on his individual income tax returns, nor is
there any evidence that Silbernagel returned any of the payments
to FAMC.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011