Warren G. Buck and Judith A. Buck - Page 16

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          the amount of the understatement is reduced by the portion of it            
          that is attributable to the tax treatment of any item with                  
          respect to which the taxpayer has or had substantial authority              
          for his or her position and for which the taxpayer reasonably               
          believed that the tax treatment was more likely than not the                
          proper treatment.  Sec. 6661(b)(2)(B) and (C).                              
               Petitioners argue that they had substantial authority for              
          the loss of $13,919 and the investment tax credit of $20,899 that           
          they claimed in their 1983 return with respect to Ridge Energy,             
          but they presented no evidence and make no argument that they               
          believed that that return position regarding those items was more           
          likely than not the proper treatment.  Petitioners further argue            
          that they reasonably and in good faith relied upon their tax                
          adviser in claiming those items and that they are not liable for            
          the addition to tax under section 6661(a).                                  
               Respondent counters that petitioners did not have substan-             
          tial authority for the tax treatment of the items that they                 
          claimed in their 1983 return with respect to Ridge Energy, that             
          it was not reasonable for them to rely on their tax adviser, and            
          that therefore petitioners are liable for the addition to tax               
          under section 6661(a).                                                      
               The regulations under section 6661 provide in pertinent                
          part:                                                                       

          7(...continued)                                                             
          F.3d 954 (9th Cir. 1993).                                                   




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