Jacqueline Medina - Page 12

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               The accuracy-related penalty under section 6662(a) does not            
          apply to any portion of an underpayment, however, if it is shown            
          that there was reasonable cause for, and that the taxpayer acted            
          in good faith with respect to, that portion.  Sec. 6664(c)(1);              
          sec. 1.6664-4(b), Income Tax Regs.  The determination of whether            
          the taxpayer acted with reasonable cause and in good faith                  
          depends on the pertinent facts and circumstances, including the             
          taxpayer’s efforts to assess his or her proper tax liability, the           
          knowledge and experience of the taxpayer, and the reliance on the           
          advice of a professional.  Sec. 1.6664-4(b)(1), Income Tax Regs.            
               Petitioner argues that she is not liable for the accuracy-             
          related penalty because she relied upon the advice of her                   
          attorney to exclude the $58,000 amount.  While the Commissioner             
          bears the burden of production under section 7491(c), the                   
          taxpayer bears the burden of proof with regard to issues of                 
          reasonable cause, substantial authority, or similar provisions.             
          Higbee v. Commissioner, supra at 446.  Therefore, petitioner must           
          show that she supplied her adviser with all the correct and                 
          necessary information and that her error in not reporting the               
          $58,000 amount was the result of her adviser’s mistake.                     
               In the instant case, petitioner’s attorney represented her             
          during all stages of the lawsuit, including filing the complaint            
          and negotiating the settlement agreement.  Furthermore, the                 
          attorney endorsed and deposited the two checks Liberty made                 






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Last modified: May 25, 2011