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1193 (6th Cir. 1996). An undue hardship will result to the
taxpayer if, by paying on the due date, he or she will suffer a
substantial financial loss; for example, a loss due to the sale
of property at a distress price. See Fran Corp. v. United
States, 164 F.3d 814, 816-817 (2d Cir. 1999). We review de novo
whether petitioners are liable for the addition to tax for
failure to pay tax. See Goza v. Commissioner, supra at 181-182.
Petitioners contend that they had reasonable cause for not
paying their tax in 1995 because petitioner misunderstood the law
relating to taxation of the capital gain received on the sale of
their house. We disagree. Petitioner said that he did not
receive a statement at closing showing the amount of sale
proceeds from the house that would be reported to the IRS, but he
did not say that he tried to obtain one. Petitioner’s mistaken
belief about the taxability of the gain from their house is not
reasonable cause for failing to pay petitioners’ 1995 tax,
especially since petitioner did not consult an accountant or tax
professional for advice regarding the 1995 return. See
Henningsen v. Commissioner, 243 F.2d 954, 959 (4th Cir. 1957),
affg. 26 T.C. 528 (1956). More importantly, we have difficulty
understanding petitioners’ argument since they concede that the
tax liability they reported on the return is correct.
Petitioners contend that they had reasonable cause because
they twice tried to get a second trust on their house (in October
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