- 21 -
failure to timely file income tax returns by the due date of the
returns unless that failure is due to reasonable cause. To
establish reasonable cause, taxpayers must show that they
exercised ordinary business care and prudence but were still
unable to file their returns by the due date. Sec. 301.6651-
1(c)(1), Proced. & Admin. Regs. Whether the untimely filing of
tax returns is due to reasonable cause raises a question of fact.
Denenburg v. United States, 920 F.2d 301, 303 (5th Cir. 1991).
Section 6662(d) imposes a penalty for substantial
understatements of tax but provides that the amount of any
understatements shall be reduced by that portion that is
attributable to either (1) the tax treatment of any item for
which there was substantial authority or (2) any item if the
relevant facts affecting the item's tax treatment are adequately
disclosed in the returns or in statements attached to the
returns. Sec. 6662(d)(2)(B).
Petitioners argue that the delay in filing their 1990 joint
Federal income tax return was due to reasonable cause based on
the destruction by Hurricane Hugo of records of Guardian Bank,
Guardian Services, and Stanford Financial that were necessary to
properly prepare and file their 1990 joint Federal income tax
return and that extra time was needed to reconstruct these
records.
Petitioners, however, offer no argument regarding the
4-month delay between November 5, 1991, the day they signed their
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011