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circumstances. See sec. 1.6664-4(b)(1), Income Tax Regs. The
most important factor is the extent of the taxpayer's effort to
assess his proper tax liability for the year. See id.
Based on the record, we find that petitioners have proved
that their underpayments were due to reasonable cause and that
they acted in good faith. Petitioners were able to substantiate
most of the expenses claimed on their returns and disallowed by
respondent. We hold that petitioners are not liable for the
section 6662(a) accuracy-related penalties for 1993 and 1994.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011