Madeline A. Coblenz and William J. Mason - Page 22

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          due to negligence or disregard of rules or regulations.                     
          Respondent's determinations are presumed to be correct, and                 
          petitioners bear the burden of proving that the accuracy-related            
          penalty does not apply.  See Rule 142(a).                                   
               A substantial understatement of tax is defined as an                   
          understatement of tax that exceeds the greater of 10 percent of             
          the tax required to be shown on the tax return or $5,000.  See              
          sec. 6662(d)(1)(A).  The understatement is reduced to the extent            
          that the taxpayer has (1) adequately disclosed his or her                   
          position or (2) has substantial authority for the tax treatment             
          of the item.  See sec. 6662(d)(2)(B).  Section 6662(c) defines              
          “negligence” as any failure to make a reasonable attempt to                 
          comply with the provisions of the Internal Revenue Code, and                
          “disregard” means any careless, reckless, or intentional                    
               Whether applied because of a substantial understatement of             
          tax or negligence or disregard of the rules or regulations, the             
          accuracy-related penalty is not imposed with respect to any                 
          portion of the understatement as to which the taxpayer acted with           
          reasonable cause and in good-faith.  See sec. 6664(c)(1).  The              
          decision as to whether the taxpayer acted with reasonable cause             
          and in good-faith depends upon all the pertinent facts and                  
          circumstances.  See sec. 1.6664-4(b)(1), Income Tax Regs.                   
          Relevant factors include the taxpayer's efforts to assess his               

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