Robert and Joyce Dirkse - Page 20

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               Nothing in the record indicates that petitioners used the              
          Corona property or their Schedule C activities to derive personal           
          pleasure or recreation.  Consequently, this factor weighs in favor          
          of finding a profit motive.                                                 
               To conclude, after giving due consideration to the record as           
          a whole, we find that during the years in issue, petitioners did            
          not carry on their Schedule C activities with an intent to make a           
          profit.  Accordingly, we sustain respondent’s disallowance of               
          petitioners’ Schedule C losses.                                             
          Section 6662(a) Accuracy-Related Penalty                                    
               We next consider whether petitioners are liable for the                
          section 6662(a) accuracy-related penalties for the years in issue.          
               Section 6662 imposes a penalty equal to 20 percent of any              
          portion of an underpayment of tax that is attributable to                   
          negligence or disregard of rules or regulations or to a substantial         
          understatement of tax.  See sec. 6662(a), (b)(1), and (b)(2).               
          “Negligence” includes any failure of the taxpayer to make a                 
          reasonable attempt to comply with the provisions of the Internal            
          Revenue Code, and “disregard” includes any careless, reckless, or           
          intentional disregard of the Internal Revenue Code or its rules or          
          regulations.  Sec. 6662(c).  The accuracy-related penalty will be           
          imposed unless the taxpayers can demonstrate that they acted in             
          good faith and with reasonable cause with respect to the                    

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