William F. Middleton - Page 15




                                       - 15 -                                         
         V.  For 1991, is Petitioner Liable for the Negligence Penalty                
         With Respect to Omitted Interest Income, a Claimed Loss From the             
         Sale of a Taxi, or Unsubstantiated Business Deductions?                      
               On his delinquently filed 1991 return, petitioner claimed a            
         $1,490 loss from the sale or involuntary conversion of a taxi.               
         In the notice of deficiency, respondent determined an $84                    
         accuracy-related negligence penalty under section 6662                       
         attributable to those two items for 1991.  Respondent also                   
         determined, as an alternative to the fraud penalty for 1991, that            
         petitioner was liable for an accuracy-related negligence penalty             
         under section 6662(b)(1) or (c).  Because we have decided that               
         petitioner is not liable for the fraud penalty for 1991, we                  
         consider whether petitioner is liable for the negligence penalty             
         with respect to unsubstantiated Schedule C business deductions               
         for 1991.                                                                    
               Section 6662 provides that if any portion of any                       
         underpayment is due to negligence, then a taxpayer will be liable            
         for a penalty equal to 20 percent of the underpayment of tax                 
         required to be shown on the return that is attributable to the               
         taxpayer’s negligence.  See sec. 6662(a) and (b)(1).  Negligence             
         is defined as the “lack of due care or failure to do what a                  
         reasonable and ordinarily prudent person would do under the                  
         circumstances.”  Korshin v. Commissioner, 91 F.3d 670, 672 (4th              
         Cir. 1996).  As pertinent here, “negligence” includes the failure            
         to make a reasonable attempt to comply with the provisions of the            
         Internal Revenue Code and also includes any failure to keep                  




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011