- 6 - prudently and exercised due care in choosing the treatment of the items in issue. Allen v. Commissioner, 925 F.2d 348, 353 (9th Cir. 1991), affg. 92 T.C. 1 (1989); Neely v. Commissioner, supra at 947-948. The section 6662(b)(1) penalty shall not in any event be imposed with respect to any portion of an understatement as to which the taxpayer acted with reasonable cause and in good faith. Sec. 6664(c)(1). Unreported Gross Receipts In the notice of deficiency, respondent determined that petitioner had unreported Schedule C gross receipts of $132,330 in 1990 and $58,107 in 1991. Respondent now concedes that petitioner did not have any unreported gross receipts in 1991, and the parties have stipulated that the unreported gross receipts in 1990 were $12,911 rather than $132,330. Citing Sindik v. Commissioner, T.C. Memo. 1996-47, respondent contends that the underpayment arising from the unreported receipts is attributable to negligence because petitioner failed to keep adequate books and records. In particular, respondent argues that petitioner was negligent in keeping only invoices and in failing to maintain a ledger or journal in which he separately recorded information regarding his gross receipts. Taxpayers are required to keep such records "as are sufficient to establish the amount of gross income * * * required to be shown" on the return. Sec. 1.6001-1(a), Income Tax Regs. The regulations further provide that negligence for purposes ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011