- 8 - shown that there was reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. The determination of whether a taxpayer acted with reasonable cause and in good faith is made on a case-by-case basis, taking into account all pertinent facts and circumstances. Sec. 1.6664- 4(b)(1), Income Tax Regs. Circumstances that may indicate reasonable cause and good faith include an honest misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances. Id. With regard to the underpayment due to the underreporting of income, we are convinced that petitioner acted with reasonable cause and in good faith. During the year in issue, Key repeatedly changed the method by which it compensated petitioner. Petitioner undoubtedly relied upon an information return, prepared by Key, when he prepared his 1994 income tax return. The information return prepared by Key failed to disclose his commission income. Reliance on an information return can constitute reasonable cause and good faith if such reliance is reasonable and the taxpayer acted in good faith. Id. Given the facts and circumstances of this case, including petitioner's confusion about his tax obligations during the period in issue, we find that petitioner acted with reasonable cause and good faith when he failed to report the commission income.Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011