- 9 -
explanation as to why this item should be treated as a loan when
OTFP records reflected the $32,500 as income. We also note that
petitioners’ record of payments from FSZ ($68,920) is
approximately consistent with the budget of $65,000.
Based on the foregoing we conclude that the $32,500 was not
a loan, and respondent’s determination of omitted income is
sustained.
2. Section 6651(a)(1) Addition to Tax
Respondent determined that petitioners are liable for an
addition to file under section 6651(a)(1) for failure to file
their return timely. The parties stipulated that petitioners
filed the return for the 1997 tax year late, on May 14, 1998.
Petitioners have not argued or presented any evidence that
would indicate that their failure to file timely was due to
reasonable cause. Accordingly, respondent’s determination is
sustained.
3. Section 6662(a) Accuracy-Related Penalty
Section 6662 provides that if any portion of any
underpayment required to be shown on a return is due to
negligence or disregard of the rules or regulations, then a
taxpayer will be liable for a penalty equal to 20 percent of the
underpayment of tax required to be shown on the return that is
attributable to the taxpayer’s negligence or disregard of the
rules or regulations. Sec. 6662(a) and (b)(1). “Negligence”
includes any failure to make a reasonable attempt to comply with
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011