- 8 - one of which is negligence or disregard of rules or regulations. See sec. 6662(b)(1). “Negligence” includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code, including any failure to keep adequate books and records or to substantiate items properly. See sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. Section 6664(c)(1) provides that the penalty under section 6662(a) shall not apply to any portion of an underpayment if it is shown that there was reasonable cause for the taxpayer’s position and that the taxpayer acted in good faith with respect to that portion. The determination of whether a taxpayer acted with reasonable cause and in good faith is made on a case-by-case basis, taking into account all the pertinent facts and circumstances. See sec. 1.6664-4(b)(1), Income Tax Regs. The most important factor is the extent of the taxpayer’s effort to assess his proper tax liability for the year. See id. Petitioner’s purported substantiation was meager. He presented receipts for various expenses which were not self- evidently employee business expenses and which were not adequately explained as such at trial. The receipts appear to have been haphazardly assembled, and those receipts which were dated in the years in issue (with legible dollar amounts) are far from equal the amount of expenses claimed by petitioner on his returns. Finally, many of the receipts were for travel expensesPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011