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taxpayer with two separate and distinct businesses may use
different methods of accounting to report income for each
business. This provision does not have application to
petitioners’ situation, however, as Real McCoy is not a separate
and distinct trade or business and the deduction claimed by Real
McCoy did not arise from a bona fide transaction.
As illustrated, the above passages do nothing to assist
petitioner in demonstrating reasonable cause. Since petitioner
has not raised any other arguments in his defense, we find that
he has failed to satisfy his burden. Accordingly, we hold
petitioners liable for the accuracy-related penalty asserted
against them.
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011