Dorothy A. Wilson - Page 10




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               4. Accuracy-Related Penalty                                            
               Respondent determined that petitioner is liable for                    
          accuracy-related penalties under section 6662(a) for 1996 and               
          1997.  The accuracy-related penalty is equal to 20 percent of any           
          portion of an underpayment of tax required to be shown on the               
          return that is attributable to the taxpayer’s negligence or                 
          disregard of rules or regulations.  Sec. 6662(a) and (b)(1).                
          “Negligence” consists of any failure to make a reasonable attempt           
          to comply with the provisions of the Internal Revenue Code.  Sec.           
          6662(c).  “Disregard” consists of any careless, reckless, or                
          intentional disregard.  Id.                                                 
               An exception applies to the accuracy-related penalty when              
          the taxpayer demonstrates (1) there was reasonable cause for the            
          underpayment, and (2) the taxpayer acted in good faith with                 
          respect to such underpayment.  Sec. 6664(c).  Whether the                   
          taxpayer acted with reasonable cause and in good faith is                   
          determined by the relevant facts and circumstances.  The most               
          important factor is the extent of the taxpayer’s effort to assess           
          the proper tax liability.   Stubblefield v. Commissioner, T.C.              
          Memo. 1996-537; sec. 1.6664-4(b)(1), Income Tax Regs.  Section              
          1.6664-4(b)(1), Income Tax Regs., specifically provides:                    
          “Circumstances that may indicate reasonable cause and good faith            
          include an honest misunderstanding of fact or law that is                   
          reasonable in light of all of the facts and circumstances,                  






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