- -36
Section 6662(d)(2)(B) states that the amount of the
understatement shall be reduced by the portion of the
understatement which is attributable to the tax treatment of any
item if there is or was substantial authority for such treatment
or if the relevant facts affecting the item's tax treatment are
adequately disclosed on the return or in a statement attached to
the return and there is a reasonable basis for the tax treatment
of such item. To determine whether the treatment of any portion
of an understatement is supported by substantial authority, the
weight of authorities in support of the taxpayer's position must
be substantial in relation to the weight of authorities
supporting contrary positions. Antonides v. Commissioner, 91
T.C. 686, 702-703 (1988), affd. 893 F.2d 656 (4th Cir. 1990).
Section 6664(c)(1) provides that the penalty should not be
imposed on any portion of an underpayment if the taxpayer shows
reasonable cause for such portion of the underpayment and that
the taxpayer acted in good faith with respect to such portion.
Reliance on the advice of a professional, such as an accountant,
may constitute a showing of reasonable cause if, under all the
circumstances, such reliance is reasonable and the taxpayer acted
in good faith. Sec. 1.6661-6(b), Income Tax Regs.
We hold that petitioner acted with reasonable cause. Mr.
and Mrs. Penalba relied on the advice of their accountant, Mr.
Blumberg, both in determining the salaries for the year at issue
and establishing the bonus plan. Mr. Blumberg was under the
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011