Aziz A. Tokh and Susan K. Tokh - Page 16




                                       - 16 -                                         

          not authorized by law (such as transportation for charitable                
          purposes) show a pattern of negligence and disregard of the                 
          applicable rules or regulations.  Petitioners were put on notice            
          during the audit of their 1991 income tax return that they were             
          not entitled to deductions for estimated expenses or for expenses           
          that were not substantiated by receipts and records.  Petitioners           
          are well-educated individuals who knew or should have known that            
          proper record keeping is essential to their entitlement to                  
          deductions.  Petitioner testified at trial that he was aware of             
          the record keeping obligations, that he was too busy to comply              
          with them, and that he would not change his methodology.  With              
          respect to the claimed investment deductions for expenses of the            
          mutual funds, petitioners ignored information in their annual               
          reports that showed that income was reported on a net basis and             
          that they were not entitled to a deduction for the operating                
          expenses.  Petitioners claimed the deductions mentioned above               
          without consulting an accountant or attorney.  Their actions are            
          not the actions of reasonable and ordinarily prudent persons.               
          Thus, petitioners are liable for penalties under section 6662(a)            
          for both years in issue.                                                    
               We have considered all remaining arguments made by                     
          petitioners for a result contrary to that expressed herein, and,            
          to the extent not discussed above, they are irrelevant or without           
          merit.                                                                      





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011