- 20 - Sec. 6664(c)(1). The decision as to whether the taxpayer acted with reasonable cause and in good faith depends upon all pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. Generally, the most important factor is the extent of the taxpayer's efforts to assess the proper tax liability. Id. A taxpayer must establish error in the determination that he or she is liable for the penalty provided by section 6662(a). Rule 142(a); Estate of Monroe v. Commissioner, 104 T.C. 352, 366 (1995). On brief, petitioner contends that she believed in good faith that the expenses that she claimed were allowable. Good faith on the part of a taxpayer, however, does not always negate negligence. Taxpayers are required to take reasonable steps to determine the law and to comply with it. Niedringhaus v. Commissioner, 99 T.C. 202, 222 (1992). In the instant case, petitioner has not shown that her claimed deductions for expenses were made with any significant regard to whether they were personal in nature, and the record supports the inference that petitioner's photography activity was used to deduct personal expenses. We do not consider petitioner to have acted reasonably with respect to the deduction of those expenses claimed for her photography activity. Moreover, petitioner failed to investigate the qualifications of any of the persons owning or operating United Sovereigns or of Mr. Webber before enlisting them to prepare her tax returns for the years in issue. Based on ourPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011