- 22 -
during 1990 were a deferral from prior years. Petitioner,
however, testified that the fees in issue were only in part a
deferral from years prior to 1990. Consequently, bearing heavily
against petitioners as authorized by Cohan, we will approximate
that 40 percent of the attorneys' fees paid during 1990 were
incurred for services rendered in defense of the embezzlement
suit. Accordingly, we hold that the S Corporation is entitled to
deduct $13,690.40 in attorneys' fees for its 1990 taxable year,
and we sustain respondent's increase in petitioners' distributive
share of income from the S Corporation to the extent of
$20,535.60.
The final issue to be decided is whether petitioners are
liable for an addition to tax and penalty pursuant to sections
6651 and 6662 for taxable year 1990. Section 6651(a)(1) imposes
an addition to tax for failure to file timely a tax return unless
it is shown that such failure is due to reasonable cause and not
willful neglect. A taxpayer can establish reasonable cause by
showing that, despite the exercise of ordinary care and prudence,
the taxpayer was unable to file the required tax return within
the prescribed time. United States v. Boyle, 469 U.S. 241, 246
(1985); Crocker v. Commissioner, 92 T.C. 899, 913 (1989); sec.
301.6651-1(c)(1), Proced. and Admin. Regs. Willful neglect has
been defined as a conscious, intentional failure or reckless
indifference to timely filing a return. United States v. Boyle,
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