-22-
for each separate expenditure. Sec. 1.274-5(c)(1), Income Tax
Regs.
Petitioners have failed to produce any of the requisite
detailed substantiation. They have failed to present evidence as
to the nature and business purpose of the claimed expenses. We
therefore disallow petitioners’ 1989 travel, meal, and
entertainment expenses in full.
Issue 3. Accuracy-Related Penalty
The final issue for decision is whether petitioners are liable
for the section 6662(a) accuracy-related penalty for negligence or
substantial understatement of income tax for 1989. Section 6662
imposes an addition to tax equal to 20 percent of the portion of
the underpayment that is attributable to (1) negligence or
disregard of rules or regulations, or (2) substantial
understatement of income tax. Sec. 6662(a) and (b)(1) and (2).
“Negligence” includes any failure to make a reasonable attempt
to comply with the provisions of the Internal Revenue Code, and
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c). Negligence is defined as the lack of due
care or the failure to do what a reasonable and ordinarily prudent
person would do under the circumstances. Marcello v. Commissioner,
380 F.2d 499, 506-507 (5th Cir. 1967), affg. in part and remanding
in part 43 T.C. 168 (1964); Neely v. Commissioner, 85 T.C. 934, 947
(1985).
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011