Gregory A. Maslow and Marina Maslow - Page 14

          Issue 4.  Delinquency Addition to Tax and Accuracy-Related Penalty          
               Respondent determined the section 6651(a)(1) addition to tax           
          for failure to timely file a 1992 income tax return and the section         
          6662 accuracy-related penalty for negligence.                               
               Section 6651(a)(1) provides for an addition to tax for failure         
          to file a timely return.  A taxpayer may avoid the addition to tax          
          by establishing that the failure to file a timely return was due to         
          reasonable cause and not willful neglect. Rule 142(a); United               
          States v. Boyle, 469 U.S. 241, 245-246 (1985).                              
               Petitioners failed to timely file their 1992 tax return.  They         
          did not present any evidence establishing that their delinquent             
          filing was due to reasonable cause.  Indeed, the evidence reveals           
          that they knew that they were required to file income tax returns           
          but did not do so until contacted by respondent's revenue agent.            
               Section 6662 imposes a penalty equal to 20 percent of the              
          portion of the underpayment that is attributable to negligence.  In         
          order to avoid this penalty, petitioners must prove that they were          
          not negligent.  Negligence is defined as the failure to exercise            
          the due care that a reasonable, prudent person would exercise under         
          similar circumstances.  Zmuda v. Commissioner, 731 F.2d 1417, 1422          
          (9th Cir. 1984), affg. 79 T.C. 714 (1982); Neely v. Commissioner,           
          85 T.C. 934, 947 (1985).                                                    
               Petitioners failed to exercise the due care that a reasonable          
          prudent person would have exercised by (1) failing to maintain              
          adequate books and records, (2) failing to report the $7,220 sales          

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