-11-
We conclude that respondent satisfied his burden of
production with respect to these accuracy-related penalties, and
that petitioners are liable for the same. Petitioners failed to
report the income purportedly received by the trusts.
Petitioners’ tax return for 1997 showed $5,357 as tax due, while
the actual tax due was $64,474. Petitioners’ tax return for 1998
showed $4,005 as tax due, while the actual tax due was $66,563.
It follows that petitioners’ understatements of income taxes for
1997 and 1998 were substantial. Petitioners failed to present
any evidence that either of those understatements was due to
reasonable cause. Nor did petitioners present any evidence that
they had made adequate disclosure, or that any exception applies
in their case to the imposition of accuracy-related penalties for
1997 and 1998.
We sustain respondent’s determination that petitioners are
liable for accuracy-related penalties under section 6662(a) for
1997 and 1998.
We have considered all arguments made by the parties and
have found those arguments not discussed herein to be irrelevant
and/or without merit. To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011