- 42 -
litigation and in this case.23 This evidence supports a
conclusion that Henry and Esther’s position regarding the
disputed payments was not asserted in good faith, as required by
section 6664(c).
We hold that Henry and Esther are liable for the accuracy-
related penalty in each of the years 1989 through 1994 and 1996.
In light of our holding, we do not address respondent’s
alternative position regarding section 6662.
IV. Whether Henry Is Liable for an Addition to Tax Under Section
6651(a) for Failure To File a Return for Tax Year 1995
Section 6651(a) imposes an addition to tax for failure to
file a return, unless it is shown that such failure is due to
reasonable cause and not due to willful neglect. See sec.
6651(a)(1); United States v. Boyle, 469 U.S. 241, 245 (1985);
United States v. Nordbrock, 38 F.3d 440, 444 (9th Cir. 1994);
Harris v. Commissioner, T.C. Memo. 1998-332. A failure to file a
timely Federal income tax return is due to reasonable cause if
the taxpayer exercised ordinary business care and prudence and,
nevertheless, was unable to file the return within the prescribed
time. See sec. 301.6651-1(c)(1), Proced. & Admin. Regs. Willful
neglect means a conscious, intentional failure to file or
reckless indifference. See United States v. Boyle, supra at 245.
23In the State trial, Henry admitted that he had a personal
debt to both FirsTier and Chevrolet and that part of the covenant
not to compete payments deposited into the sweep account was
going to FirsTier and Chevrolet to pay his personal debts.
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