Paul L. Blanton and Cynthia D. Blue-Blanton - Page 16

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          passed on January 31, 1990, for us to find that their ownership             
          preceded that date.  Thus, petitioners do not qualify under                 
          section 121(a)(2).                                                          
          B.   Whether Petitioners Are Liable for the Addition to Tax Under           
               Section 6651(a)(1) for Failure To File Timely                          
               Section 6651(a)(1) imposes an addition to tax of up to 25              
          percent for failure to file timely Federal income tax returns               
          unless the taxpayer shows that such failure was due to reasonable           
          cause and not willful neglect.  United States v. Boyle, 469 U.S.            
          241, 245 (1985).  To prove "reasonable cause", a taxpayer must              
          show that he exercised ordinary business care and prudence and              
          was nevertheless unable to file the return within the prescribed            
          time.  Crocker v. Commissioner, 92 T.C. 899, 913 (1989); sec.               
          301.6651-1(c)(1), Proced. & Admin. Regs.                                    
               Petitioners' 1992 return was due October 15, 1993.                     
          Petitioners filed their 1992 return on July 25, 1994.                       
               Petitioners argue that they had reasonable cause to file               
          their 1992 return late because they thought that Schmitz had                
          requested an extension of time to file.  A failure to file is due           
          to reasonable cause if the taxpayers exercised ordinary business            
          care, but could not, nevertheless, file their return by the                 
          deadline prescribed by law.  United States v. Boyle, supra at               
          246; Bank of the West v. Commissioner, supra at 471.                        
               Mr. Blanton testified that Schmitz told him that requests              
          for extensions had been filed.  Two extensions were filed                   
          regarding petitioners' 1992 return which extended the due date to           



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