Thomas C. Sandoval, Jr. and Bobbie J. Sandoval - Page 23

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          the returns and it took him additional time to replace his return           
          preparer, and (3) they showed their good faith by filing timely             
          extension requests and by paying cash deposits with those                   
          requests.  We disagree.                                                     
               Petitioners are liable for an addition to tax for failure to           
          timely file a tax return unless they show that their failure to             
          timely file 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).                                                            
               Petitioners had extensions of time to file their returns for           
          the years in issue, but they filed them long after the extended             
          time had passed.  Making cash deposits does not substitute for              
          timely filing a return.  Petitioners did not show that they had             
          reasonable cause to file their returns late or that they                    
          exercised good faith in filing their returns.  Thus, petitioners            
          are liable for the additions to tax for failure to timely file              
          their tax returns for each year in issue.                                   
          H.   Whether Petitioners Are Liable for the Addition to Tax or              
               Penalty for Substantial Understatement                                 
               Petitioners contend that they are not liable for additions             
          to tax for substantial understatement of tax under section                  
          6661(a) for 1985 and 1987 and accuracy-related penalties for                
          substantial understatement of tax under section 6662(b)(2) and              
          (d) for 1989 and 1990 because they had reasonable cause for the             
          understatements and they acted in good faith.  They rely on their           

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