Kenneth & Linda J. Logie - Page 10

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          issue.  Consequently, we hold that petitioners are liable for tax           
          on Social Security benefits pursuant to section 86.                         

          Accuracy-Related Penalty                                                    
               Respondent determined that petitioners are liable for an               
          accuracy-related penalty under section 6662(a) for negligence or            
          disregard of rules or regulations.  Section 6662(a) imposes a 20-           
          percent penalty on the portion of an underpayment that is                   
          attributable to negligence or disregard of rules or regulations.            
          Under section 6662(c), "negligence" includes failure to make a              
          reasonable attempt to comply with the provisions of the Internal            
          Revenue Code.  Negligence is a “‘lack of due care or failure to             
          do what a reasonable and ordinarily prudent person would do under           
          the circumstances.’”  Neely v. Commissioner, 85 T.C. 934, 947               
          (1985) (quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th            
          Cir. 1967), affg. in part and remanding per curiam 43 T.C. 168              
          (1964)).  “Disregard” includes careless, reckless, or intentional           
          disregard of rules or regulations.  Sec. 6662(c).                           
               No penalty shall be imposed if the taxpayer acted in good              
          faith and there was reasonable cause for the underpayment.  Sec.            
          6664(c)(1).  The burden is on the taxpayer to prove the                     
          Commissioner's imposition of the penalty is in error.  Luman v.             
          Commissioner, 79 T.C. 846, 860-861 (1982); Bixby v. Commissioner,           
          58 T.C. 757 (1972).                                                         

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