John Shackelford Fairbanks - Page 14

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          Section 6662(a)                                                             
               The last issue for decision is whether petitioner is liable            
          for a penalty pursuant to section 6662(a).  Section 6662(a)                 
          imposes a penalty of 20 percent of the portion of the                       
          underpayment which is attributable to negligence or disregard of            
          rules or regulations.  See sec. 6662(b)(1).  Negligence is the              
          lack of due care or failure to do what a reasonable and                     
          ordinarily prudent person would do under the circumstances.  See            
          Neely v. Commissioner, 85 T.C. 934, 947 (1985).  The term                   
          "disregard" includes any careless, reckless, or intentional                 
          disregard.  Sec. 6662(c).  No penalty shall be imposed if it is             
          shown that there was reasonable cause for the underpayment and              
          the taxpayer acted in good faith with respect to the                        
          underpayment.  See sec. 6664(c).                                            
               At trial, petitioner failed to establish that he acted in              
          good faith with respect to his 1995 underpayment.  Petitioner               
          failed to comply with section 183 and disregarded rules and                 
          regulations by deducting excessive losses for the 1995 tax year.            
          On the basis of the record, we hold that petitioner is liable for           
          the accuracy-related penalty under section 6662(a).                         
               To reflect the foregoing,                                              
                                                  Decision will be entered            
                                             for respondent.                          

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