Cleo Perfume, Inc. - Page 15

                                       - 15 -                                         

          liability for the taxable year.  Sec. 1.6081-4(a)(4), Income Tax            
          Regs.  The failure to estimate properly the final tax liability on          
          Form 7004 can invalidate the automatic extension and subject the            
          taxpayer to an addition to tax pursuant to section 6651(a)(1) for           
          failure to timely file the return.  Crocker v. Commissioner, 92             
          T.C. 899 (1989). Respondent argues that petitioner failed to                
          estimate properly its tax liability on Form 7004 when it filed for          
          the automatic extension, and thus the extension is invalid.                 
               We agree.   Petitioner failed to report any tax liability on           
          its application.    Putting  aside  petitioner's  concessions,              
          petitioner reported a $52,180 tax liability on its tax return for           
          year ended June 30, 1991, despite the fact that it estimated "0" on         
          its application.                                                            
               Moreover, petitioner has failed to present any evidence on             
          this issue (other than to contend that it is not liable for the             
          addition) and has accordingly failed to satisfy its burden of               
          proof.  Clearly, petitioner has failed to show that it estimated            
          properly the final tax liability on Form 7004.  See, e.g., Scott v.         
          Commissioner, T.C. Memo. 1997-507. Consequently, we sustain                 
          respondent's determination.                                                 
          Issue 3.  Section 6662(a) Accuracy-Related Penalty                          
               The final issue is whether petitioner is liable for the                
          section 6662(a) accuracy-related penalty.  Section 6662 imposes an          
          accuracy-related penalty equal to 20 percent of any portion of an           

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

Last modified: May 25, 2011