- 32 -
perspective of either Alexion Trust or Caralan Trust, makes no
sense.
The J. Shirleys have failed to prove facts entitling them to
the depreciation deduction of $19,896 claimed by them, and we
sustain respondent’s determination of a deficiency to the extent
based on his disallowance of such deduction.
B. Penalties
1. Section 6662(a)
Section 6662(a) provides for an accuracy-related penalty
(the accuracy-related penalty) in the amount of 20 percent of the
portion of any underpayment attributable to, among other things,
negligence or intentional disregard of rules or regulations
(without distinction, negligence), any substantial understatement
of income tax, or any substantial valuation misstatement.
Respondent determined the accuracy-related penalty
against the J. Shirleys. Although the J. Shirleys’ notice states
that respondent bases his imposition of the section 6662(a)
accuracy-related penalty upon “1 or more” of the three grounds
listed in section 6662(b)(1) through (3), on brief, respondent
relies only on his claims that the J. Shirleys were negligent or
substantially understated their income tax.
Respondent bears the burden of production with respect to
all penalties. See sec. 7491(c). The burden imposed by section
7491(c) is only to come forward with evidence regarding the
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011