- 11 -- 11 - 1993-528; sec. 1.6664-4(b)(1), Income Tax Regs. The most important factor is the taxpayer's effort to assess his proper tax liability. Stubblefield v. Commissioner, T.C. Memo. 1996- 537; sec. 1.6664-4(b)(1), Income Tax Regs. Taxpayers are required to keep records sufficient to establish the amount of deductions or other matters required to be shown on their returns. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. Failure to maintain adequate records may constitute negligence. Schroeder v. Commissioner, 40 T.C. 30, 34 (1963). The record here shows that Mr. Palomo is a highly educated individual. The Court finds it unreasonable that petitioner, an attorney, would base his analysis of taxable income on knowledge from a class he took 20 years earlier in law school rather than from appropriate legal research. Petitioner testified that he failed to even make the minimal effort of consulting the IRS information booklet that accompanied his Federal income tax return. The Court finds that his explanations do not demonstrate an honest misunderstanding of fact or law that is reasonable in light of his experience, knowledge, and education. The Court concludes that petitioners failed to keep adequate records. The Court also finds that petitioners failed to make a reasonable attempt to determine whether they were entitled to take medical expense deductions for Mr. Potter and Susan and whether they were allowed to omit the Smith income from theirPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011