- 21 -
automobile’s prorated lease value from her gross income in those
years.
III. Section 6662 Penalty
A. Accuracy-Related Penalties for Negligence or Disregard
Respondent determined that, for 1994, Christopher and Brenda
and Gregory and Linda (petitioners Cox) were liable for an
accuracy-related penalty under section 6662(a) because their
underpayments of tax for 1994 were due to negligence or disregard
of rules or regulations. Although petitioners Cox contend that
they are not liable for the accuracy-related penalty under
section 6662, the only arguments they made in support of their
position were that respondent erred in making his determination
and that Christopher and Gregory had sufficient bases to allow
them to deduct the NOLs claimed.
Section 6662(a) and (b)(1) imposes a penalty equal to 20
percent of the portion of an underpayment of income tax
attributable to negligence or disregard of rules or regulations.
Negligence is defined as “any failure to make a reasonable
attempt to comply with the provisions of * * * [the Internal
Revenue Code]”. Sec. 6662(c); see Neely v. Commissioner, 85 T.C.
934, 947 (1985) (negligence is lack of due care or failure to do
what a reasonable and prudent person would do under the
circumstances). The term “disregard” includes “any careless,
reckless, or intentional disregard.” Sec. 6662(c). Disregard of
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011