James R. and Janet M. Landrum - Page 23

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          unsuccessful experience with Amway.  Additionally, respondent has           
          shown that petitioners failed to substantiate their claimed                 
          charitable contribution deductions.  These circumstances show               
          that respondent has met his burden of production for his                    
          determination of the accuracy-related penalty based on                      
          negligence.  Also, with regard to that determination, petitioners           
          have failed to meet their burden of proof that they acted with              
          reasonable cause and in good faith.                                         
               On this record, we find that petitioners have failed to                
          demonstrate that they were not negligent and also have failed to            
          show that they did not disregard applicable rules or regulations.           
          They have not shown that there was reasonable cause for their               
          underpayment or that they acted in good faith.                              
               Accordingly, we sustain respondent’s imposition of the                 
          accuracy-related penalty under section 6662(a) for 1997.                    
               Reviewed and adopted as the report of the Small Tax Case               
                                                  Decision will be entered            
                                             for respondent.                          

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