Lewis Peter and Judy Hasty Larson - Page 10




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               We must determine whether petitioners acted with reasonable            
          cause and in good faith within the meaning of section 6664(c)(1)            
          and the regulations thereunder when they reported in Schedule C             
          of their 1999 joint return only $1,892, and not $21,891.95, as              
          the nonemployee compensation that Mr. Larson received from                  
          Windermere during 1999.  Petitioners contend that they did.  In             
          support of that contention, petitioners point out that, because             
          of the alignment error in Form 1099 that Windermere issued to Mr.           
          Larson for the year at issue, it was not readily apparent from              
          reviewing that form that the amount of nonemployee compensation             
          reported therein was $21,891.95, and petitioners assumed that the           
          amount of such compensation reported in that form was $1,891.95.            
          On the instant record, we reject petitioners’ argument that under           
          section 6664(c)(1) and the regulations thereunder the Court                 
          should not hold them liable for the accuracy-related penalty                
          under section 6662(a).                                                      
               It is significant that, by reporting only $1,892, instead of           
          $21,891.95, as the amount of nonemployee compensation that Mr.              
          Larson received from Windermere during 1999, petitioners failed             
          to report approximately (1) 91 percent of the total nonemployee             
          compensation that Mr. Larson received from Windermere during that           
          year and (2) 82 percent of the total nonemployee compensation               
          that he received from Windermere and from Data Search during that           










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