- 17 - Property, to report any loss under section 1244 on their 1999 tax return. Nor could they. During the year in issue, KOA entered into contracts with Days Inn of America, Inc. and Netstock Direct Corp. In August 2001, KOA merged into e-Redeem, Inc., via a proposal that KOA’s shareholders would receive an aggregate of 49.568 percent of the fully diluted capital stock of the merged entity. These factors weigh against a finding of worthlessness of KOA stock in 1999. While such facts may not preclude a finding of worthlessness, they do place upon petitioners the duty to offer more than their own testimony and the corporate books to support their view. See Jacobowitz v. Commissioner, T.C. Memo. 1968-261. On this issue we hold for respondent. Accuracy-Related Penalty Under Section 6662(a) The final issue is whether petitioners are liable for an accuracy-related penalty under section 6662(a) for the 1999 taxable year. An accuracy-related penalty “applies to any portion of an underpayment of tax required to be shown on a return” where such portion is attributable to either (1) negligence of disregard of rules or regulations or (2) a substantial understatement of tax. Sec. 6662(a), (b)(1), (2). The term “negligence” includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Sec. 6662(c). The term “disregard” includes any careless, reckless, or intentional disregard. Id. An understatement ofPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011