Calypso Music Incorporated - Page 11




                                       - 11 -                                         
           the years in issue.                                                        
                Respondent determined that petitioner was liable for an               
           accuracy-related penalty, under section 6662(a) and (b)(1) or              
           (2), for negligence or intentional disregard of rules and                  
           regulations or substantial understatement of income tax.                   
           Petitioner argues that it is not so liable.  Petitioner asserts            
           that a certified public accountant prepared its returns and                
           that the accountant had access to all of the materials now                 
           before the Court.  Petitioner argues that it reasonably relied             
           on professional advice in preparing its returns and therefore              
           should not be held liable for the accuracy-related penalty.                
                Section 6662(a) imposes a 20-percent accuracy-related                 
           penalty on the portion of an underpayment that is due to one or            
           more of the causes enumerated in section 6662(b).  Respondent              
           relies on subsections (b)(1) (negligence or intentional                    
           disregard of rules or regulations) and/or (b)(2) (substantial              
           understatement of income tax).                                             
                Negligence includes a failure to attempt reasonably to                
           comply with the Code.  See sec. 6662(c).  Disregard includes a             
           careless, reckless, or intentional disregard.  See id.                     
                A substantial understatement of income tax is defined to              
           be the greater of 10 percent of the income tax required to be              
           shown on the return for the taxable year or $5,000.  See sec.              
           6662(d).  In the instant case $5,000 is the greater amount for             






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011