John Favia - Page 7




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               Furthermore, the participation by petitioner and by other              
          creditors of TMC in the bankruptcy litigation in 1995 with regard           
          to the status of the promissory notes from TMC is indicative that           
          the $100,000 TMC promissory note did not become worthless at the            
          end of 1994.                                                                
               The evidence before us fails to establish that the $100,000            
          TMC promissory note was worthless as of the end of 1994.                    
               Under section 6662, an accuracy-related penalty of 20                  
          percent is imposed on any portion of an understatement of tax               
          attributable to negligence or to disregard of Federal rules or              
          regulations.  For purposes of section 6662(a), negligence                   
          constitutes a failure to make a reasonable attempt to comply with           
          the Internal Revenue Code.  Sec. 6662(c).                                   
               The penalty under section 6662(a) does not apply to any part           
          of an underpayment if the taxpayer shows reasonable cause and if            
          the taxpayer acted in good faith with regard to the items giving            
          rise to the underpayment.  Sec. 6664(c)(1).  Reasonable cause may           
          be indicated by reliance in good faith on the advice of a tax               
          professional.  United States v. Boyle, 469 U.S. 241, 250 (1985).            
               Based on the limited facts before us in this case, we                  
          conclude that petitioner is not liable for the accuracy-related             
          penalty under section 6662.                                                 










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