- 18 - Under section 6664(c), no penalty will be imposed with respect to any portion of any underpayment if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. This determination is based on all of the facts and circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. The most important factor is the extent of the taxpayers' effort to assess their proper tax liability for the years at issue. Sec. 1.6664-4(b)(1), Income Tax Regs. On the record before us, we find that respondent's determination of penalties under section 6662(a) is correct. Petitioners filed their 1994 and 1995 returns after Green v. Commissioner, T.C. Summary Opinion 1995-167 was filed on September 5, 1995. Petitioners filed their 1994 return on October 12, 1995. Notwithstanding our holding that the $18,120 payment was not excludable under section 104(a)(2), petitioners nonetheless continued to exclude that amount on their 1994 and 1995 returns. Petitioners offered no reasonable explanation as to its exclusion. In this regard, we find that petitioners' actions were not those of a reasonable and prudent person under the circumstances. Accordingly, we sustain respondent's determination on this issue for 1994 and 1995.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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