- 10 -
attributable. The term “negligence” includes any failure to make
a reasonable attempt to comply with the provisions of the
internal revenue laws, and the term “disregard” includes any
careless, reckless, or intentional disregard. Sec. 6662(c); see
sec. 1.6662-3(b)(2), Income Tax Regs.
Negligence often takes the form of an understatement of
income or an overstatement of deductions. See Healey v.
Commissioner, T.C. Memo. 1996-260, and cases cited therein.
Understatement of income or overstatement of deductions may
reflect the inadequacy of the taxpayer's records, which is, of
itself, a basis for sustaining the accuracy-related penalty. In
this regard, we observe that a taxpayer is required to maintain
records sufficient to establish all items of income, deduction,
and credit that are required to be shown on the taxpayer’s tax
return. See sec. 6001; sec. 1.6001-1(a), Income Tax Regs.; see
also Lysek v. Commissioner, 583 F.2d 1088, 1094 (9th Cir. 1978),
affg. T.C. Memo. 1975-293; Crocker v. Commissioner, 92 T.C. 899,
916 (1989); Schroeder v. Commissioner, 40 T.C. 30, 34 (1963);
sec. 1.6662-3(b)(1), Income Tax Regs. Additionally, failure to
keep adequate records is evidence of intentional disregard of the
regulations. See Crocker v. Commissioner, supra at 917.
On the other hand, no penalty shall be imposed under section
6662(a) with respect to any portion of an underpayment if it is
shown that there was a reasonable cause for such portion and that
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011