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do what a reasonable and prudent person would do under the
circumstances. Neely v. Commissioner, 85 T.C. 934, 947 (1985).
Disregard is defined to include any careless, reckless, or
intentional disregard of rules or regulations. Sec. 6662(c);
sec. 1.6662-3(b)(2), Income Tax Regs.
Upon review of the facts and circumstances of this case, we
find that petitioners are well-educated individuals with
professional backgrounds. They entered into an Amway endeavor
even though the Amway Business Review highlighted the fact that
the average gross income for active distributors was $88.
Petitioners consistently hid the fact that their losses were from
an Amway entity. They continued this endeavor even though the
result was years of substantial tax losses and years of
substantial tax deductions. We were not satisfied with their
purported record keeping or their testimony. We do not believe
the aforesaid actions are the actions of reasonable and prudent
persons. We sustain the section 6662(a) accuracy-related
penalties for all 3 years in question.
Decisions will be entered for
respondent.
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