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the amount of $1,500 dated August 31, 1992, and endorsed on
behalf of "Utica Deca Corporation." Mr. Bradley testified that
he paid this amount as a management fee to have the property
monitored to prevent unauthorized woodcutting or hunting. Under
section 212(2), a deduction is allowable for expenses that are
ordinary and necessary "for the management, conservation, or
maintenance of property held for the production of income." The
regulations promulgated under section 212 provide that the term
"ordinary and necessary" means that the expenses must be
reasonable in amount and bear a reasonable and proximate relation
to the management, conservation, or maintenance of property held
for such purposes. Sec. 1.212-1(a)(2), (d), Income Tax Regs.
The term "held for the production of income" includes held for
appreciation in value, whether to maximize gain or to minimize
loss. See sec. 1.212-1(b), Income Tax Regs. On this record, we
find the management fees satisfy section 212(2) and decline to
sustain respondent's disallowance of the deduction for them.
Addition to Tax for Failure To File a Timely Return
Section 6651(a)(1) imposes an addition to tax 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.
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