- 18 -
which is attributable to negligence or disregard of rules
or regulations. The term “negligence” includes any failure
to make a reasonable attempt to comply with the provisions
of the Internal Revenue Code, and the term “disregard”
includes any careless, reckless, or intentional disregard.
Sec. 6662(c). Negligence is defined as the lack of due
care or the failure to do what a reasonable and ordinarily
prudent person would do under the circumstances. E.g.,
Neely v. Commissioner, 85 T.C. 934, 947 (1985).
Section 6664(c) provides that no penalty shall be
imposed under section 6662 with respect to any portion of
an underpayment if it is shown that there was reasonable
cause for such portion and that the taxpayer acted in good
faith with respect to such portion. Petitioner does not
assert that he has met the requirements of section 6664(c).
Petitioner argues that the penalty under section
6662(a) should not be imposed for two reasons. First,
petitioner argues that the "tax treatment of his investment
in the vessel Cloudia * * * was * * * based on substantial
authority". According to petitioner:
An amount of understatement attributable
to a treatment by a taxpayer based on sub-
stantial authority does not constitute a
"substantial understatement" by definition.
IRC � 6662 (d)(1)(A).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011