- 30 -
There is nothing in the record to suggest that petitioner
ever requested that respondent waive the addition to tax under
section 6661(a). Indeed, petitioner does not even allege that he
requested such a waiver. For that reason alone, petitioner is
not entitled to relief from liability. See McCoy Enters., Inc.
v. Commissioner, 58 F.3d 557, 563-564 (10th Cir. 1995), affg. T.C.
Memo. 1992-693; Klieger v. Commissioner, T.C. Memo. 1992-734;
sec. 1.6661-6, Income Tax Regs.
Even if petitioner had requested a waiver under section
6661(c), the record demonstrates that he failed to act reasonably
and in good faith in deducting his claimed loss from San
Nicholas. As general partner and tax matters partner of four
other jojoba partnerships, specifically including Utah Jojoba,
petitioner was aware, or should have been aware, that San
Nicholas was not engaged in the research and development of
jojoba. Accordingly, petitioner knew, or should have known, that
in the absence of any research and development, there could be no
deduction for research and experimental expenditures under
section 174.
In view of the foregoing, we hold that petitioner is liable
for the addition to tax under section 6661(a) for substantial
understatement of tax liability. Respondent’s determination is
sustained.
III. Conclusion
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011