Franklin D. and Sandra M. Terrell - Page 6

                                        - 6 -                                         

          possession of Mr. Terrell's business records indicates a lack of            
          causal link between their failure to file and the riots and fires           
          occurring near their home.                                                  
               Under these circumstances, we conclude that petitioners'               
          failure to file their 1991, 1992, and 1993 income tax returns was           
          not due to reasonable cause.  Therefore, respondent properly                
          imposed the addition to tax.                                                
          II. Accuracy-Related Penalty Under Section 6662(a)                          
               Respondent determined that petitioners were liable for the             
          accuracy-related penalty under section 6662(a) for their 1991,              
          1992, and 1993 taxable years, respectively.  Section 6662(a)                
          imposes an accuracy-related penalty of 20 percent on any portion            
          of an underpayment of tax that is attributable to items set forth           
          in section 6662(b).  Section 6662(b)(1) applies section 6662(a)             
          to any portion of an underpayment attributable to negligence or             
          disregard of rules or regulations.                                          
               Petitioners must prove that they were not negligent; i.e.,             
          that they made a reasonable attempt to comply with the provisions           
          of the Internal Revenue Code, and that they were not careless,              
          reckless, or intentional disregard of rules or regulations.  See            
          sec. 6662(c); Rule 142(a); LaVerne v. Commissioner, 94 T.C. 637,            
          652 (1990), affd. without published opinion 956 F.2d 274 (9th               
          Cir. 1992); sec. 1.6662-3(b), Income Tax Regs.  "Negligence" has            
          also been defined as a "lack of due care or failure to do what a            

Page:  Previous  1  2  3  4  5  6  7  8  Next

Last modified: May 25, 2011