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II. Additions to Tax and Accuracy-Related Penalty
Because we have concluded that the $81,000 did not
constitute taxable compensation and the parties have made various
concessions, they will have to determine in their Rule 155
computations whether Paul or Lorna has an underpayment of tax so
that the additions to tax pursuant to sections 6651(a)(1) and
6654 still apply to Paul and the accuracy-related penalty
pursuant to section 6662 still applies to Lorna.
For purposes of the section 6651(a)(1) addition to tax
calculation, Paul does not argue that the “reasonable cause and
not due to willful neglect” exception applies, and we conclude
that the exception does not apply in the instant case. With
regard to the section 6654 addition to tax, Paul argues on brief
that the exception listed in section 6654(e)(1) applies. The
section 6654(e)(1) exception is computational, and we leave it
for the parties to compute.
As for the section 6662 accuracy-related penalty, Lorna
argues that she acted in good faith and that she did not engage
in negligence or disregard of rules or regulations. Because
Lorna has failed to present any evidence with regard to the
underpayment (if any) associated with the items of income
conceded, we conclude that the section 6664(c)(1) exception (for
reasonable cause and good faith) does not apply.
To the extent not herein discussed, we have considered the
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