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Harchester Realty Corp. v. Commissioner, supra; cf. Vaira v.
Commissioner, supra (unpaid appraisal fees); Landreth v.
Commissioner, T.C. Memo. 1985-413, affd. in part, revd. in part
and remanded 859 F.2d 643 (9th Cir. 1988) (unpaid legal fees).
Accuracy-Related Penalty
Section 6662 imposes an accuracy-related penalty of 20
percent of the portion of the underpayment of tax attributable to
any substantial understatement of income tax. Sec. 6662(a) and
(b)(2). There is no question that the understatement of tax
involved herein is substantial under section 6662(d)(1)(A).
The accuracy-related penalty will not be imposed with
respect to any portion of an underpayment if it is shown that
there was a reasonable cause for such portion and that the
taxpayer acted in good faith with respect to such portion. Sec.
6664(c). The determination of whether a taxpayer acted with
reasonable cause and in good faith depends upon the facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. The most
important factor is the extent of the taxpayer's effort to
determine the taxpayer's proper tax liability. Id.
Generally, the taxpayer cannot avoid the duty of filing
accurate returns by placing responsibility on a tax return
preparer. Metra Chem Corp. v. Commissioner, 88 T.C. 654, 662
(1987). Reliance on the advice of a professional does not
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