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unreported income of $121,722.45, without even considering our
conclusion that they had additional substantial amounts of
income, a prima facie case exists for imposition of the penalty.
The record in this case negates any mitigation by reasonable
cause, and petitioners have not shown good faith or reasonable
reliance on Grey. Their failure to maintain adequate books and
records constitutes negligence, particularly when that failure
resulted in substantial underreporting of income. See sec.
6662(c). The penalty determined by respondent is sustained.
To reflect the foregoing and the concessions of the parties,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011