- 12 - would do under the circumstances.’” Korshin v. Commissioner, 91 F.3d 670, 672 (4th Cir. 1996) (quoting Schrum v. Commissioner, 33 F.3d 426, 437 (4th Cir. 1994), affg. in part, vacating and remanding in part T.C. Memo. 1993-124), affg. T.C. Memo. 1995-46. As pertinent here, “negligence” includes the failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code and also includes any failure to keep adequate books and records or to substantiate items properly. See sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. A taxpayer may, however, avoid the application of the accuracy- related penalty by proving that he or she acted with reasonable cause and in good faith. See sec. 6664(c). Whether a taxpayer acted with reasonable cause and in good faith is measured by examining the relevant facts and circumstances, and most importantly, the extent to which he or she attempted to assess the proper tax liability. See Neely v. Commissioner, 85 T.C. 934 (1985); Stubblefield v. Commissioner, T.C. Memo. 1996-537; sec. 1.6664-4(b)(1), Income Tax Regs. Petitioner concedes he did not report Form 1099 income from Capitol and Life USA in 1996. Additionally, we have found that petitioner failed to maintain adequate records related to claimed automobile and home office expenses. Therefore, we find the underpayment due to the omitted Form 1099 income and the disallowed Schedule C expenses to be attributable to negligencePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
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