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petitioners’ claim that they are entitled to a capital loss under
either section 165(f) or 165(g).
Are Petitioners Liable for the Accuracy-Related Penalties Under
Section 6662?
Respondent determined that petitioners’ underpayment of tax
was due to negligence or intentional disregard of rules or
regulations and that, therefore, they are liable for the
accuracy-related penalty under section 6662. Petitioners dispute
this determination, claiming that they relied upon the advice of
their accountant in reporting the moneys paid on Schedules C to
their returns and that the accountant’s advice was rendered after
the accountant researched applicable tax law.
Section 6662(a) authorizes the imposition of a penalty equal
to 20 percent of an underpayment attributable to negligence or
disregard of rules or regulations. See sec. 6662(a) and (b)(1).
For purposes of section 6662, the term negligence includes any
failure (1) “to make a reasonable attempt to comply with the
provisions of * * * [the Internal Revenue Code]”, sec. 6662(c),
(2) “to exercise ordinary and reasonable care in the preparation
of a tax return”, sec. 1.6662-3(b)(1), Income Tax Regs., and (3)
“to keep adequate books and records or to substantiate items
properly”, id. The term disregard includes “any careless,
reckless, or intentional disregard” of rules or regulations.
Sec. 6662(c); sec. 1.6662-3(b)(2), Income Tax Regs. Section
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