- 18 -
15, 1992. Therefore, petitiioners' return is deemed timely
mailed/timely filed. Sec. 7502. Respondent concedes this issue.
Issue 5. Penalty Under Section 6662(a)
Respondent determined that petitioners' underpayment of tax
for 1990 was due to negligence or disregard of rules or
regulations, subjecting them to the accuracy-related penalty of
section 6662(a).
Section 6662 provides for an accuracy-related penalty equal
to 20 percent of the portion of the underpayment due to
negligence or disregard of rules or regulations. For purposes of
section 6662, negligence "includes any failure to make a
reasonable attempt to comply with the * * * [income tax laws]"
and disregard "includes any careless, reckless, or intentional
disregard." Sec. 6662(c).
When petitioners acquired Washington Chocolate, the company
was performing poorly and close to bankruptcy. Through his
business plan and innovation, petitioner increased both the
company's sales and its value. We accept that as a result of his
efforts petitioner had a good faith belief that he was entitled
to additional commission payments. We also accept that
petitioner was sent back and forth between Glico and MEI when he
attempted to open discussions about additional payments. This,
however, does not change the fact that petitioners are not
entitled to a bad debt deduction.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011