Wayne M. and Janet L. Johnson - Page 12

                                       - 12 -                                         

               An exception applies to the accuracy-related penalty when              
          the taxpayer demonstrates (1) there was reasonable cause for the            
          underpayment, and (2) he acted in good faith with respect to such           
          underpayment.  See sec. 6664(c).  Whether the taxpayer acted with           
          reasonable cause and in good faith is determined by the relevant            
          facts and circumstances.  The most important factor is the extent           
          of the taxpayer's effort to assess his or her proper tax                    
          liability.  See Stubblefield v. Commissioner, T.C. Memo. 1996-              
          537; sec. 1.6664-4(b)(1), Income Tax Regs.  Section 1.6664-                 
          4(b)(1), Income Tax Regs., specifically provides: "Circumstances            
          that may indicate reasonable cause and good faith include an                
          honest misunderstanding of fact or law that is reasonable in                
          light of * * * the experience, knowledge and education of the               
               It is the taxpayer's burden to establish he is not liable              
          for the accuracy-related penalty imposed by section 6662(a).  See           
          Rule 142(a); Tweeddale v. Commissioner, 92 T.C. 501, 505 (1989).            
          Petitioner claimed a loss carryover in the amount of $3,313,240             
          and a charitable contribution deduction in the amount of $2,024             
          in 1994 and failed to substantiate the claimed deduction under              
          the requirements of section 6001 and the applicable regulations.            
          Petitioner is an attorney with knowledge of the law.  On the                
          basis of the entire record, we conclude that petitioners have not           
          established the underpayment was due to reasonable cause and that           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011