Robert Lee and Rebecca Waters - Page 16

                                       - 15 -                                         
          to properly substantiate items constitutes negligence.  Sec.                
          1.6662-3(b)(1), Income Tax Regs.  In addition, negligence is                
          strongly indicated where a taxpayer fails to include on an income           
          tax return an amount of income shown on an information return.              
          Sec. 1.6662-3(b)(1)(i), Income Tax Regs.                                    
          C.  Addition To Tax Under Section 6651(a)(1)                                
               Finally, we consider whether petitioners are liable for an             
          addition to tax under section 6651(a)(1).                                   
               Section 6651(a)(1) imposes an addition to tax for failure to           
          timely file an income tax return.  The addition to tax may be               
          avoided if the failure to timely file is due to reasonable cause            
          and not willful neglect.  “Reasonable cause” contemplates that              
          the taxpayer exercised ordinary business care and prudence and              
          was nonetheless unable to file a return within the prescribed               
          time.  United States v. Boyle, 469 U.S. 241, 246 (1985); sec.               
          301.6651-1(c)(1), Proced. & Admin. Regs.  “Willful neglect” means           
          a conscious, intentional failure or reckless indifference.                  
          United States v. Boyle, supra at 245.                                       
               Section 7491(c) places on the Commissioner the burden of               
          production with respect to a taxpayer’s liability for any penalty           
          or addition to tax.  However, as previously mentioned, the                  
          taxpayer still has the burden of proving that the Commissioner's            
          determination of the addition to tax is erroneous.  Rule 142(a);            
          INDOPCO, Inc. v. Commissioner, supra; Welch v. Helvering, supra;            

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

Last modified: May 25, 2011