Darryl Shawn and Melonee Yevette Bundridge - Page 17

                                       - 17 -                                         

               Section 6662 imposes a penalty equal to 20 percent of the              
          part of the underpayment of tax that is attributable to                     
          negligence.  Sec. 6662(a) and (b)(1).  For purposes of section              
          6662, negligence is a failure to reasonably attempt to comply               
          with the provisions of the Internal Revenue Code.  Sec. 6662(c).            
          Negligence is defined as "'lack of due care or failure to do what           
          a reasonable and ordinarily prudent person would do under the               
          circumstance.'"  Neely v. Commissioner, 85 T.C. 934, 947 (1985)             
          (quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir.              
          1967)).  A taxpayer has the burden of proving that the                      
          Commissioner's determination of an addition to tax is in error.             
          Luman v. Commissioner, 79 T.C. 846, 860-861 (1982).                         
               The accuracy-related penalty under section 6662(a) does not            
          apply to any part of an underpayment if the taxpayer shows that             
          there is reasonable cause for that part of the underpayment and             
          that the taxpayer acted in good faith based on the facts and                
          circumstances.  Sec. 6664(c)(1).                                            
               In petitioners' closing statement and posttrial brief, they            
          argue that they are not liable for the penalties because of their           
          reasonable and good faith efforts, citing Lyons v. Commissioner,            
          T.C. Memo. 1991-84.  In Lyons, the taxpayers had a reasonable               
          system for maintaining financial records and preparing their tax            
          returns.  In addition, the taxpayers had a relationship with an             
          accountant who prepared their returns.  While many of the                   
          relevant records were unavailable to the taxpayers, the Court               



Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  Next

Last modified: May 25, 2011