- 6 - OPINION Under section 6653(a), (a)(1), and (a)(2), an addition to tax is imposed on the portion of an underpayment of tax attributable to a taxpayer’s negligence equal to 5 percent of the underpayment plus 50 percent of the interest due thereon under section 6601. Negligence is generally described as the failure to use due care or to do what a reasonable and ordinarily prudent person would do under the circumstances. Allen v. Commissioner, 925 F.2d 348, 353 (9th Cir. 1991), affg. 92 T.C. 1 (1989); Laverne v. Commissioner, 94 T.C. 637, 652 (1990), affd. without published opinion 956 F.2d 274 (9th Cir. 1992), affd. without published opinion sub nom. Cowles v. Commissioner, 949 F.2d 401 (10th Cir. 1991). Good faith reliance on the advice of a tax professional may indicate that a taxpayer was not negligent. Allen v. Commissioner, supra at 353-354; Collins v. Commissioner, 857 F.2d 1383, 1386 (9th Cir. 1988), affg. T.C. Memo. 1987-217. Reliance on the advice of a tax professional may not be reasonable where the professional had no firsthand knowledge of the proposed investment and where the professional only made a cursory review of the proposed investment. Sacks v. Commissioner, 82 F.3d 918, 920 (9th Cir. 1996), affg. T.C. Memo. 1994-217; Collins v. Commissioner, supra at 1386.Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011