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(the difference between the $16,680 business income and $1,425
expense) that Mr. Norwalk reported. This results in a net
increase in taxable income of $1,425, which we uphold.
Failure To File--Section 6651(a)
Respondent determined that Robert and Patricia DeMarta are
liable for an addition to tax under the provisions of section
6651(a). Section 6651(a) imposes an addition to tax for failure
to timely file a return, unless the taxpayer establishes that
such failure is due to reasonable cause and not due to willful
neglect. Mr. and Mrs. DeMarta failed to file their 1992
individual tax return within the period allowed for filing. An
extension to file their return was granted until October 15,
1993. According to the notice of deficiency issued to Mr. and
Mrs. DeMarta, their 1992 return was filed on October 27, 1993.
Petitioners have provided no evidence or argument on this issue.
We find that Mr. and Mrs. DeMarta are liable for the addition to
tax in accordance with section 6651(a)(1).
Imposition of Accuracy-Related Penalty--Section 6662(a)
Respondent has determined that the corporation, William R.
Norwalk, and Robert and Patricia DeMarta are liable for accuracy-
related penalties under section 6662(a). Section 6662(a)
provides that, if it is applicable to any portion of an
underpayment in taxes, there shall be added to the tax an amount
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