Abhimanyu Swain - Page 8

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          the legal expenses attributable to the criminal action are not              
          deductible.  United States v. Gilmore, supra at 49.                         
               Accordingly, we hold that the payments made by petitioner              
          are not deductible as business or profit-seeking expenses.                  
          3.  The Accuracy-Related Penalty                                            
               Section 6662(a) imposes an accuracy-related penalty equal to           
          20 percent of the portion of the underpayment to which section              
          6662 applies.  Section 6662 applies to that portion of the                  
          underpayment attributable to negligence or disregard of rules or            
          regulations.  Sec. 6662(b)(1).  The term "negligence" includes              
          any failure to make a reasonable attempt to comply with the                 
          Internal Revenue Code, and the term "disregard" includes any                
          careless, reckless or intentional disregard.  Sec. 6662(c).                 
          Negligence is defined as a lack of due care or the failure to do            
          what a reasonably prudent person would do under the                         
          circumstances.  Neely v. Commissioner, 85 T.C. 934, 947 (1985).             
               We find that petitioner was negligent for both years.                  
          Petitioner conceded at trial that he was not entitled to some of            
          the deductions he claimed on his income tax returns.  Petitioner            
          argued that he supplied all of his income tax information to a              
          "friend" who used this information to prepare petitioner's 1989             
          and 1990 returns.  In addition, petitioner argued that some of              
          the deductions claimed were not derived from the information                
          provided to his friend.                                                     






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