Marie G. and Michael L. Pacheco - Page 6




                                        - 5 -                                         

          preparer, Robin Beltran, and had no reasonable basis in law or in           
          fact, as addressed later in this opinion.  Petitioners virtually            
          admitted that in their testimony.  The Court is, nevertheless,              
          satisfied that petitioners made some contributions during the               
          years in question.  In the absence of more convincing evidence,             
          the Court, on this record, allows petitioners a deduction of $300           
          for each of the years in question.  Cohan v. Commissioner, 39               
          F.2d 540, 543-544 (2d Cir. 1930).                                           
               Petitioners contend they should be absolved of liability for           
          the section 6662(a) penalties because they relied on the                    
          representations of their return preparer.                                   
               Section 6662(a) provides for an accuracy-related penalty               
          equal to 20 percent of any portion of an underpayment of tax                
          required to be shown on the return that is attributable to the              
          taxpayer's negligence or disregard of rules or regulations.  Sec.           
          6662(a) and (b)(1).  Negligence consists of any failure to make a           
          reasonable attempt to comply with the provisions of the Internal            
          Revenue Code, and disregard consists of any careless, reckless,             
          or intentional disregard.  Sec. 6662(c).  The courts have refined           
          the Code definition of negligence as a lack of due care or                  
          failure to do what a reasonable and prudent person would do under           
          similar circumstances.  Allen v. Commissioner, 925 F.2d 348, 353            
          (9th Cir. 1991), affg. 92 T.C. 1 (1989).  Section 1.6662-3(b)(1),           
          Income Tax Regs., provides that "Negligence is strongly indicated           





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011