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timely file the returns was not due to reasonable cause, but to
willful neglect.
The addition to tax under section 6651(a)(1) is 5 percent of
the "amount required to be shown as tax on * * * [the] return".
Section 6651(b)(1) provides that, for purposes of computing the
addition to tax, "the amount of tax required to be shown on the
return shall be reduced by the amount of any part of the tax
which is paid on or before the date prescribed for payment of the
tax." The Court has concluded that the levied amounts held by
respondent for petitioner's account did not constitute a payment
of tax. Also, with respect to the $2,899.89 that the Court has
held constituted a payment of petitioner's 1987 tax liability,
that payment does not allow for a reduction of the section
6651(a)(1) addition to tax because it was not made on or before
the date prescribed for payment of the tax; i.e., on or before
April 15, 1988. Therefore, we sustain respondent's determination
as to the section 6651(a)(1) additions to tax for 1986 and 1987.
To reflect concessions and our disposition of the disputed
issues,
Decision will be entered
under Rule 155.
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