- 25 -
understatement exceeds the greater of either 10 percent of the
tax required to be shown on the return for the taxable year or
$5,000. Sec. 6662(d)(1)(A).
The penalty provided for in section 6662 is not imposed on
any portion of an underpayment if it is shown that there was
reasonable cause for such portion and the taxpayer acted in good
faith with respect to that portion. Sec. 6664(c)(1); sec.
1.6664-4(b), Income Tax Regs. Reliance on the advice of a
professional, such as an accountant, does not necessarily
demonstrate reasonable cause and good faith unless the reliance
was reasonable and the taxpayer acted in good faith. Sec.
1.6664-4(b)(1) and (c)(1), Income Tax Regs. In the case of
claimed reliance on the accountant who prepared the taxpayer’s
tax return, the taxpayer must establish that correct information
was provided to the accountant and that the item incorrectly
omitted, claimed, or reported in the return was the result of the
accountant’s error. Ma-Tran Corp. v. Commissioner, 70 T.C. 158,
173 (1978).
Respondent determined that petitioner is liable for the
accuracy-related penalty because of either negligence or
disregard of the rules or regulations or substantial
understatement of income tax. Petitioner asserts that she is not
liable for the section 6662 penalty because she was not
negligent, she did not disregard the statutes or regulations, she
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011