Everett J. Diers - Page 12

                                       - 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 negligence             

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011