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was to ensure that the Nortons would not strip down the value of
the bank’s lien on the property by failing to remedy environmental
hazards.) The $15,000 deposit into the controlled savings account
did not pay environmental cleanup costs. Thus, we sustain
respondent’s determination on this issue.
Issue 5. Section 6662(a) Accuracy-Related Penalty
The final issue is whether the Nortons are liable for the
section 6662(a) accuracy-related penalty.
Section 6662 imposes a penalty equal to 20 percent of any
portion of an understatement that is attributable to negligence or
disregard of rules or regulations or substantial underpayment of
tax. See sec. 6662(a) and (b)(1). “Negligence” includes any
failure of the taxpayer to make a reasonable attempt to comply with
the provisions of the Code, and “disregard” includes any careless,
reckless, or intentional disregard of rules and regulations. Sec.
6662(c). The accuracy-related penalty will be imposed unless the
taxpayers can demonstrate that there was reasonable cause and they
acted in good faith with respect to the underpayment. See sec.
6664(c)(1). In determining the applicability of section
6664(c)(1), we weigh the particular facts and circumstances of each
case. See sec. 1.6664-4(b), Income Tax Regs. One of the most
important factors that we take into account is the extent of the
taxpayer’s effort to assess the proper tax liability. See id.
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