Helen Sophie Schroeder - Page 19

                                           - 19 -                                            
          Beginning        Ending                                                            
          Inventory      Inventory                                                           
                Crystal (horse)          -0-            -0-                                  
                Midnight (horse)         -0-            -0-                                  
                Rags (horse)             -0-           $600                                  
                Winston (horse)          -0-            -0-                                  
                Sparky (dog)            $150            150                                  
                Wanda (dog)              200            200                                  
                Buddy (dog)              220            220                                  
                Bubbles                  -0-            -0-                                  
                2 pups                   -0-            -0-                                  
          Total                  570          1,170                                          
          Since petitioner substantiated $2,100 of materials and supplies                    
          and $600 of purchases, her total allowable costs for 1993 are                      
          $2,100 ($2,100 + 600 + (570 - 1,170)).                                             
          Section 6662(a) Accuracy-Related Penalty                                           
                Section 6662(a) imposes a penalty in an amount equal to 20                   
          percent of the portion of the underpayment of tax attributable to                  
          one or more of the items set forth in section 6662(b), such as                     
          negligence or disregard of rules or regulations.  Respondent                       
          determined that the entire underpayment of petitioner's tax was                    
          due to negligence or intentional disregard of rules or                             
          regulations.  Sec. 6662(b)(1).  As is the case of the predecessor                  
          section covering the addition to tax for negligence, section                       
          6653(a), petitioner bears the burden of proof on the penalties in                  
          issue.  Rule 142(a); Neely v. Commissioner, 85 T.C. 934, 947                       
          (1985).  Negligence includes a failure to make a reasonable                        
          attempt to comply with the provisions of the internal revenue                      
          laws.  Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.                         
          Negligence is the failure to exercise due care or the failure to                   




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Last modified: May 25, 2011