- 16 -
not shown that there is no underpayment of tax for that year.
On the record before us, we also reject petitioner’s conten-
tion that respondent’s determination under section 6662(a) is
wrong because “there is no evidence that it was negligent or
disregarded rules or regulations”. We note first that respondent
determined that petitioner is liable under section 6662(a)
because of section 6662(b), i.e., because of a substantial
understatement of income tax. Respondent did not determine that
petitioner is liable under section 6662(a) because of negligence
or disregard of rules or regulations under section 6662(b)(1).
In any event, on the record in this case, we find that petitioner
has failed to show that it was not negligent and did not disre-
gard rules or regulations in claiming the royalty expense deduc-
tion in its Form 1120 for the year at issue.
We further find on the record before us that petitioner has
failed to establish that it acted with reasonable cause and in
good faith in claiming the royalty expense deduction. In this
connection, to the extent that petitioner is claiming that it
acted with reasonable cause and in good faith in claiming the
royalty expense deduction in its tax return for the year at issue
because it relied on Mr. Miller who prepared that return, we
reject any such contention. Petitioner has not established on
the instant record that it provided correct information to Mr.
Miller with respect to that claimed deduction. The record shows
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011