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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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Last modified: May 25, 2011