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penalty is also inapplicable where a taxpayer has a “reasonable
basis” for the return position taken. See sec. 1.6662-3(b),
Income Tax Regs. A return position that is “arguable, but fairly
unlikely to prevail in court” satisfies the reasonable basis
standard. Sec. 1.6662-4(d)(2), Income Tax Regs. The negligence
accuracy-related penalty is inappropriate where an issue to be
resolved by the Court is one of first impression involving
unclear statutory language. See Everson v. United States, 108
F.3d 234 (9th Cir. 1997); Lemishow v. Commissioner, 110 T.C. 110
(1998).
With respect to petitioner’s conceded items, petitioner
claimed deductions to which he was not entitled, duplicated
deductions, and omitted taxable gain from the sale of property.
Petitioner also failed to report income from more than half of
his IRA distributions and failed to pay the 10-percent premature
distribution penalty. Petitioner contends that he is not liable
for an accuracy-related penalty with respect to these items
because Form 1040 is a “complicated return”, and he utilized a
tax software program to prepare his return.
On this stipulated record, we conclude petitioner is liable
for the negligence accuracy-related penalty with respect to the
conceded items. There is no evidence that reasonable cause
existed for these errors or that petitioner was not negligent.
Tax preparation software is only as good as the information one
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