Marco Deplano - Page 6

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               On May 7, 1995, respondent issued a notice of deficiency in            
          which he determined that petitioner was liable for additions to             
          tax for negligence or intentional disregard of rules or                     
          regulations under section 6653(a)(1) and (2) and for substantial            
          understatement of tax under section 6661(a) with respect to his             
          1983 taxable year.                                                          
                                       OPINION                                        
          Negligence                                                                  
               It is respondent's position that petitioner was negligent in           
          claiming a loss and investment tax credit from his investment in            
          Ridge Energy.2  Petitioner claims that he is not liable for the             
          additions to tax for negligence because he reasonably relied on             
          Mr. Coscia's advice when he invested in Ridge Energy and when he            
          claimed a loss and credit with respect to the same.  To support             
          his contention that his reliance was reasonably based, petitioner           
          points to his age and limited investment experience and to the              
          fact that Mr. Coscia had been his accountant for 4 years at the             
          time of his investment.                                                     
               Section 6653(a)(1) imposes an addition to tax equal to                 
          5 percent of any underpayment of tax if any part of the                     
          underpayment is due to negligence.  In addition, section                    
          6653(a)(2) adds to the tax an amount equal to 50 percent of the             


               2 Respondent does not argue that petitioner is liable for              
          the additions to tax under sec. 6653(a) due to intentional                  
          disregard of rules or regulations.                                          




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