- 8 - Stubblefield v. Commissioner, T.C. Memo. 1996-537; sec. 1.6664- 4(b)(1), Income Tax Regs. Under section 1.6664-4(b)(1), "Circumstances that may indicate reasonable cause and good faith include an honest misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances, including the experience, knowledge, and education of the taxpayer." The deficiencies in this case, except for the nominal unreported interest income amounts, are solely attributable to the actions of Allan in not providing to petitioner's income tax return preparer, an accountant, all the sources of receipts of petitioner's business income. In addition, Allan was addicted to drugs, although the Court acknowledges that the deficiencies determined by respondent do not include income that was diverted by Allan to sustain his drug habit. Nonetheless, the Court is satisfied from the evidence that petitioner was not aware of the problem with Allan and was unaware that Allan was under reporting the gross receipts of the funeral home to petitioner's return preparer. Not until petitioner's returns were examined by respondent did petitioner learn that substantial amounts of his income were being diverted by Allan for his drug addiction, and that Allan was not providing the correct gross receipts information to the return preparer. Petitioner acknowledged at trial that, after the 1996 and 1997 returns were prepared, hisPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
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