- 24 -
expenditure, and sustain respondent's determination that
petitioner recognized gain of $2,350 on the sale of her truck.16
D. Accuracy-Related Penalty
Section 6662(a) and (b)(1) imposes a penalty equal to 20
percent of the portion of an underpayment of tax that is
attributable to negligence or disregard of rules or regulations.
"Negligence" includes any failure to make a reasonable attempt to
comply with the provisions of the internal revenue laws. Sec.
6662(c). The regulations further define "negligence" to include
failure by the taxpayer to exercise ordinary and reasonable care
in the preparation of a tax return. The penalty does not apply
to any portion of an underpayment for which the taxpayer had
reasonable cause and acted in good faith. Sec. 6664(c). In
determining whether a taxpayer has acted with reasonable cause
and in good faith, all pertinent facts and circumstances are
taken into account. Sec. 1.6664-4(b)(1), Income Tax Regs. The
burden of proving that the accuracy-related penalty should not be
imposed rests with the taxpayer. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992).
We find that petitioner did not make a reasonable attempt to
comply with the provisions of the internal revenue laws, and that
she did not act with reasonable cause and good faith. Petitioner
16 The entire $2,350 of recognized gain is subject to the
recapture provision of sec. 1245 and is therefore treated as
ordinary income.
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