- 17 -
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c).
Petitioner bears the burden of proving that respondent's
determination as to the accuracy-related penalties is in error.
Rule 142(a). Petitioner argues that respondent has waived the
penalties by not addressing them at trial. Petitioner is
mistaken. The issue of the penalties arose in the pleadings, and
petitioner retained the burden of proving the penalties
inapplicable, regardless of whether the issue was addressed at
trial. See Bixby v. Commissioner, 58 T.C. 757, 791 (1972).
In this case, petitioner, an attorney, repeatedly caused his
wholly owned S corporation to deduct expenses relating to
entertainment facilities without regard to the explicit
prohibition of such deductions in the Internal Revenue Code.
Petitioner’s attempt to treat the rent for two Donzi powerboats
and a cabin cruiser as business expenses of his law practice
strikes us as the kind of abuse that Congress sought to curb in
enacting the absolute prohibition on entertainment facilities
deductions contained in section 274(a)(1)(B).
Petitioner urges that he conferred with his accountant
concerning the boat leasing activities. We are not persuaded
that this action suffices to avoid the negligence penalties.
Reliance upon disinterested expert advice may satisfy the prudent
person standard, but only when the taxpayer has shown that he
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