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portion of the understatement as to which the taxpayer acted with
reasonable cause and in good faith. Sec. 6664(c)(1). Whether a
taxpayer acts with reasonable cause and in good faith depends on
the relevant facts and circumstances, including the extent of the
taxpayer’s effort to properly assess the tax liability. See sec.
1.6664-4(b)(1), Income Tax Regs.
Given the facts and circumstances surrounding each of the
deductions here in dispute, we are satisfied that petitioners
failed to make a reasonable attempt to ascertain the correctness
of those deductions. See sec. 1.6662-3(b)(1), Income Tax Regs.
We find that the underpayment of tax required to be shown on
petitioners’ return for each year in issue is due to negligence.
Respondent’s determinations that petitioners are liable for a
section 6662(a) penalty upon that ground for each year in issue
are sustained.
Reviewed and adopted as the report of the Small Tax
Division.
To reflect the foregoing,
Decision will be
entered for respondent.
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Last modified: May 25, 2011