- 26 -
Therefore, petitioners are not entitled to a loss carryforward of
$15,892.
6. Accuracy-Related Penalty
Mr. Richards prepared petitioners’ tax return for the year
at issue.
Section 6662(a) imposes a penalty of 20 percent on any
portion of an underpayment of tax that is attributable to
negligence or disregard of rules or regulations. See sec.
6662(a) and (b)(1). “Negligence” is defined as any failure to
make a reasonable attempt to comply with the provisions of the
Internal Revenue Code, and the term “disregard” includes any
careless, reckless, or intentional disregard. Sec. 6662(c). A
position with respect to an item is attributable to negligence if
it lacks a reasonable basis. See sec. 1.6662-3(b)(1), Income Tax
Regs. Moreover, taxpayers are required to keep adequate books
and records sufficient to establish the amount of deductions or
other items required to be shown on their returns. Failure to
maintain adequate books and records or to substantiate items
properly also constitutes negligence. See id.
Section 6664(c)(1) provides that the penalty under section
6662(a) shall not apply to any portion of an underpayment if it
is shown that there was reasonable cause for the taxpayer’s
position with respect to that portion and that the taxpayer acted
in good faith with respect to that portion. See sec. 6664(c)(1).
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