- 12 -
6664(c)(1) is made on a case-by-case basis, taking into account
all pertinent facts and circumstances. See sec. 1.6664-4(b)(1),
Income Tax Regs. The most important factor is the extent of the
taxpayer's efforts to assess the taxpayer's proper tax liability.
See id.
In this case, petitioners were negligent and disregarded
rules or regulations. Petitioners received $58,475 from the
insurance company for their loss of the bus. The acquisition
cost of the bus plus the cost of petitioners' listed items total
no more than $40,359. Furthermore, petitioners claimed $18,517
of depreciation deductions, which decreased their basis in the
bus.
Although the amount that petitioners received from the
insurance company for the converted bus substantially exceeded
their basis, even without considering the depreciation charges,
petitioners never reported any portion of the insurance proceeds
as income. In addition, although petitioner testified that he
had no knowledge of tax law, petitioners apparently did not seek
the advice of anyone who could have informed them of their proper
tax liability.
It is evident from the record that petitioners did not make
a reasonable attempt to comply with the internal revenue laws or
to exercise ordinary and reasonable care in the preparation of
their tax return. Finally, we do not find that there was
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011