Unico Sales & Marketing, Inc. - Page 7




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          The accuracy-related penalty of section 6662 is not applicable to           
          any portion of an underpayment to the extent that the taxpayer              
          has reasonable cause for that portion and acts in good faith with           
          respect thereto.  See sec. 6664(c)(1).                                      
               The facts in the stipulated record fail to persuade us that            
          petitioner was not negligent or that reasonable cause existed for           
          petitioner's position on the returns.  On the contrary,                     
          petitioner conceded the validity of respondent's determination              
          that its income should be computed on the cash method, and                  
          petitioner conceded a large part of respondent's determination in           
          each year.  There is no evidence petitioner was not negligent               
          regarding the conceded items.  Likewise, there is no evidence               
          petitioner was not negligent or that reasonable cause exists                
          regarding its deduction of the unpaid accrued wages.  We sustain            
          respondent's determination.3                                                
          To reflect the foregoing,                                                   

                                                  Decision will be entered            
                                             for respondent.                          




               3Because we hold petitioner is liable for the negligence               
          penalty under sec. 6662(a) and (b)(1), we need not address                  
          respondent's alternative position that there was a substantial              
          understatement or petitioner's argument that the items were                 
          disclosed on the returns.                                                   





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