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of an underpayment attributable to negligence or disregard of
rules or regulations. Sec. 6662(b)(1). Negligence includes any
failure to make a reasonable attempt to comply with the
provisions of the Internal Revenue Code. Sec. 6662(c); sec.
1.6662-3(b)(1), Income Tax Regs.
The penalty under section 6662(a) does not apply to any
portion of an understatement of tax if it is shown that there was
reasonable cause for the taxpayer’s position and that the
taxpayer acted in good faith with respect to that portion. Sec.
6664(c)(1). The determination of whether a taxpayer acted with
reasonable cause and in good faith is made on a case-by-case
basis, taking into account all the pertinent facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. The most
important factor is the extent of the taxpayer’s effort to assess
his/her proper tax liability for the year. Id. The good faith
reliance on the advice of an independent, competent professional
as to the tax treatment of an item may meet this requirement.
Sec. 1.6664-4(b), Income Tax Regs.
Despite the fact that petitioners have the burden of proof,
see supra note 10, petitioners have made no showing that they
made an attempt to comply with the tax rules and regulations with
regard to those deductions taken by Dreyer Farms for the years at
issue which have been disallowed. Hence, with respect to those
deductions, petitioners have failed to show that Dreyer Farms was
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