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issue of Mr. Rinehart’s liability for Ms. Yeager’s COD income.
Where the Commissioner fails to address an issue in his
opening or reply brief, we may deem that he waived that issue.
Levert v. Commissioner, T.C. Memo. 1989-333, affd. without
published opinion 956 F.2d 264 (5th Cir. 1992). Therefore, we
conclude that respondent has abandoned this issue. Petzoldt v.
Commissioner, 92 T.C. 661, 683 (1989).
II. Section 6662 Penalties
Pursuant to section 6662(a), a taxpayer may be liable for a
penalty of 20 percent on the portion of an underpayment of tax
due to negligence or disregard of rules or regulations.8 Sec.
6662(b). Section 6664(c)(1) provides that no accuracy-related
penalty shall be imposed with respect to any portion of an
underpayment if it is shown that there was reasonable cause for
such portion and that the taxpayer acted in good faith with
respect to such portion. The decision as to whether the taxpayer
acted with reasonable cause and in good faith depends upon all
the pertinent facts and circumstances. Sec. 1.6664-4(b)(1),
Income Tax Regs.
With regard to the horse breeding activity, we previously
concluded that Mr. Rinehart engaged in the activity with the
intent of making a profit within the meaning of section 183.
8 Sec. 7491(c) is not applicable to these cases. See supra
note 6.
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