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Issue 4. Failure To File Addition to Tax
The fourth issue for decision is whether petitioner is liable
for an addition to tax for failure to timely file his 1991 Federal
tax return. Petitioner claims that he timely filed the return
following two extensions granted by the IRS. Respondent contends
that any extensions granted were invalid because petitioner failed
to make a bona fide and reasonable attempt to estimate his proper
tax liability.
Section 6651(a)(1) imposes an addition to tax of 5 percent of
the amount of tax due per month for each month that a tax return is
not timely filed, not to exceed 25 percent. An exception is made
for reasonable cause not due to willful neglect.
Petitioner's 1991 Federal tax return was due on April 15,
1992, but petitioner received an automatic 4-month extension
through his filing of Form 4868. In August 1992, petitioner sought
and received an additional 2-month extension to October 15, 1992.
Petitioner subsequently filed his return on October 15, 1992.
Petitioner reported a total 1991 estimated tax liability of
$25,000 on Form 4868, which was approximately one-third of the
final tax liability of $75,354 determined by respondent.
Respondent argues that petitioner failed to estimate properly his
7(...continued)
investment interest expenses. This figure was based on $157 of
unreported dividend income, $36 of reported interest income, and
$18 of unreported interest income. Due to respondent's
concession regarding the $157 of dividend income, however, the
amount of net investment income must be reduced to $54.
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