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the failure to exercise due care or the failure to do what a
reasonable and prudent person would do under the circumstances.
Neely v. Commissioner, 85 T.C. 934, 947 (1985). Disregard
includes any careless, reckless, or intentional disregard of
rules or regulations. Sec. 6662(c); sec. 1.6662-3(b)(2), Income
Tax Regs. 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. Sec. 6664(c).
On the basis of this record, we conclude that petitioners
are liable for an accuracy-related penalty under section 6662(a).
Petitioners claimed deductions for which they failed to maintain
adequate records. Moreover, petitioners failed to provide any
valid explanation or credible documentary evidence to support
their entitlement to those deductions. 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.
We have considered all arguments made by petitioners and to
the extent not discussed, we find them to be irrelevant or
without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011