Labelgraphics, Inc. - Page 35

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          portion of the underpayment and that the taxpayer acted in good             
          faith with respect to such portion.  Reliance on the advice of a            
          professional, such as an accountant, may constitute a showing of            
          reasonable cause if, under all the facts and circumstances, such            
          reliance is reasonable and the taxpayer acted in good faith.                
          Sec. 1.6664-4(c), Income Tax Regs.                                          
               Petitioner asserts that no penalty under section 6662(a) and           
          (b)(2) should be imposed.  It maintains that, pursuant to Rev.              
          Proc. 90-16, supra, its return for the year ended June 30, 1990,            
          adequately disclosed the relevant facts concerning its claimed              
          compensation deduction to Mr. Martin.  Alternatively, petitioner            
          argues that it qualifies under the section 6664(c)(1) reasonable-           
          cause-and-good-faith exception to the penalty.  We agree with               
          petitioner that there was adequate disclosure in its return,                
          since a properly completed Schedule E concerning its officers'              
          compensation was included in petitioner's return.  We hold that             
          petitioner is not liable for a penalty under section 6662(a) and            
          (b)(2) for the year ended June 30, 1990.  Notice 90-20, supra;              
          Rev. Proc. 90-16, supra.                                                    
               To reflect the foregoing and the parties' concessions,                 
                                                  Decision will be entered            
                                             under Rule 155.                          








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