Thomas B. Drummond - Page 55

                                       - 55 -                                         
          only those Schedules C showing net profits.                                 
               On the record before us, we find that petitioner's reliance            
          on Mr. McVeigh with respect to the erroneous calculation of                 
          petitioner's self-employment income for 1989 (i.e., not                     
          aggregating all Schedules C of petitioner's 1989 return) was                
          reasonable and in good faith.  Consequently, we reject respon-              
          dent's determination imposing the accuracy-related penalty on the           
          portion of the underpayment for that year that is attributable to           
          that error.39                                                               
                              Erroneous Use of the 25-Percent                         
                              Limit for 1989 and 1991                                 
               We have found that Mr. McVeigh advised petitioner to use the           
          25-percent limit, rather than the 15-percent limit.  Except for             
          petitioner's (1) informing Mr. McVeigh in April 1990 that he had            
          established a retirement plan to which he timely contributed                
          $20,000 and (2) relating to him the conversations that he had had           
          with the individual who had assisted him in establishing that               
          plan, the record does not show what petitioner told Mr. McVeigh             
          about the contributions that he made to a retirement plan for               
          1989 and 1991.  Specifically, we do not know whether petitioner             
          advised Mr. McVeigh that the retirement plan that he had estab-             
          lished was a simplified employee pension.                                   
               On the record before us, we find that petitioner has failed            


          39  Mr. McVeigh's error resulted in petitioner's claiming a                 
          deduction that exceeded by $5,075 25 percent of the aggregate               
          results shown in the Schedules C of his 1989 return.                        




Page:  Previous  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  54  55  56  57  Next

Last modified: May 25, 2011