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do what a reasonable and prudent person would do under the
circumstances. Neely v. Commissioner, supra. Disregard includes
any careless, reckless, or intentional disregard of rules or
regulations. Sec. 6662(c); sec. 1.6662-3(b)(2), Income Tax Regs.
The accuracy-related penalties of section 6662 do not apply
with respect to any portion of an underpayment if it is shown
that there was reasonable cause for such portion and the taxpayer
acted in good faith with respect to such portion. Sec.
6664(c)(1). The determination of whether petitioner acted with
reasonable cause and in good faith depends upon the pertinent
facts and circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs.
Petitioner has conceded that she failed to keep accurate
books and records, that she incorrectly claimed exemptions for
her children, and that she should not have deducted the cost of
installing the supporting rods. Petitioner has offered no
evidence that she was not negligent in determining her cost of
goods sold using fair market values rather than cost or in
deducting the costs of demolition on the Whitefeather barn. To
the extent that respondent has prevailed on the underlying
issues, her corresponding determination of the applicable
penalties is sustained.
To reflect the foregoing and concessions of the parties,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011