Betty June Dykstra and Pieter Dykstra - Page 10

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          Rule 142(a).  Petitioners failed to present evidence                        
          demonstrating that they exercised reasonable care in determining            
          their tax liability for 1994.  We find that petitioners are                 
          liable for the accuracy-related penalty under section 6662(a) for           
          1994 for the portion of the underpayment related to their                   
          embezzled income and disallowed itemized deductions.                        
          Failure To File                                                             
               Section 6651(a)(1) imposes an addition to tax for failure to           
          file a return within the date prescribed therefor, unless it is             
          shown that such failure is due to reasonable cause and not due to           
          willful neglect.  The amount added to the tax under this section            
          is 5 percent for each month or fraction thereof during which the            
          return is late up to a maximum of 25 percent.  See sec.                     
               Petitioners' 1994 return was received by respondent on                 
          September 11, 1995, and thus was filed on that date (over 4                 
          months late).  See sec. 6072(a); Sanderling, Inc. v.                        
          Commissioner, 67 T.C. 176, 178-179 (1976), affd. in part 571 F.2d           
          174 (3d Cir. 1978); Pryor v. Commissioner, T.C. Memo. 1994-287;             
          Grossman v. Commissioner, T.C. Memo. 1986-439.  Petitioners admit           
          that they never filed a return for 1995.                                    
               In regard to 1994, petitioners assert that their return was            
          "accepted" by respondent; therefore, they should not be liable              
          for the addition to tax for failure to file.  Petitioners'                  

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