- 13 -
and may only be reduced by reason of substantial authority if the
taxpayer reasonably believed that the tax treatment of the tax
shelter item was more likely than not the proper treatment. Sec.
6661(b)(2)(C).
Petitioners do not argue that substantial authority exists
for their tax treatment of the items in issue or that they
adequately disclosed the relevant facts with respect to the
Barrister partnership investment. Rather, they contend that
respondent should have waived the additions to tax pursuant to
section 6661(c).
Section 6661(c) authorizes respondent to waive any part of
the addition to tax imposed under section 6661(a) upon a showing
by the taxpayer of reasonable cause for the understatement and
that the taxpayer acted in good faith. The most important factor
in determining whether to grant a waiver is the extent of the
taxpayer's effort to assess the taxpayer's proper tax liability
under the law. Mailman v. Commissioner, 91 T.C. 1079, 1083-1084
(1988); sec. 1.6661-6(b), Income Tax Regs. Reliance upon the
advice of a professional will not constitute reasonable cause and
good faith, unless under all the circumstances, such reliance was
reasonable. Sec. 1.6661-6(b), Income Tax Regs. The appropriate
standard of review for denial of a waiver is whether respondent's
refusal to waive the section 6661 addition to tax constitutes an
abuse of discretion. Mailman v. Commissioner, supra at 1083-
1084.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011