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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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