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generally for a penalty of 20 percent of the portion of an
underpayment to which the section applies.
Section 6662(b) lists five categories in which an
underpayment of tax will be subjected to the penalty, including
negligence. "Negligence" includes any failure to make a
reasonable attempt to comply with the Internal Revenue Code.
Sec. 6662(c). Petitioners underreported their income for the
years in issue and failed to keep adequate records. In short,
petitioners did not do what a reasonable and ordinarily prudent
person would do under the circumstances. Neely v. Commissioner,
85 T.C. 934, 947 (1985). Petitioners presented no evidence to
show that their underpayments were due to reasonable cause and
that they acted in good faith with respect to such underpayments.
Sec. 6664(c). The Court is satisfied from the record that
petitioners' actions constituted negligence as defined in section
6662(c). Respondent is sustained on the section 6662 penalties
for both years.
For the foregoing reasons,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011