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keep adequate books and records or to substantiate items
properly. Sec. 1.6662-3(b)(1), Income Tax Regs. The term
"disregard" includes any careless, reckless, or intentional
disregard. Sec. 6662(c).
No penalty shall be imposed if it is shown that there was
reasonable cause for the underpayment and the taxpayer acted in
good faith with respect to the underpayment. Sec. 6664(c). 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 pertinent facts and circumstances. The most
important factor is the extent of the taxpayer's effort to assess
the taxpayer's proper tax liability.
The evidence in the record shows that petitioner failed to
report substantial amounts of income for her 2000 and 2001 tax
years. Petitioner made no effort to review the returns before
signing them and blamed her return preparer for the omissions.
Taxpayers have a duty to read a return and to make sure all
items are included. Magill v. Commissioner, 70 T.C. 465, 479-480
(1978) (citing Bailey v. Commissioner, 21 T.C. 678, 687 (1954)),
affd. 651 F.2d 1233 (6th Cir. 1981). Petitioner's failure to
carefully review her return was not reasonable. See Guenther v.
Commissioner, T.C. Memo. 1995-280. On the basis of the record,
the Court concludes that petitioner is liable for the
accuracy-related penalty under section 6662(a) for 2000 and 2001.
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Last modified: May 25, 2011