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amount. To meet this burden, the Commissioner must come forward
with sufficient evidence indicating that it is appropriate to
impose the relevant penalty. See Higbee v. Commissioner, supra.
If the Commissioner carries this burden, taxpayers then bear the
burden of showing that the addition or penalty does not apply;
i.e., that there was reasonable cause, substantial authority,
etc. Id.
Petitioners failed to timely file their 1996 return. In
order to be relieved of the addition to tax, petitioners must
establish that their failure was due to reasonable cause and not
willful neglect. Id.; see sec. 6651(a)(1). Reasonable cause is
shown when “the taxpayer exercised ordinary business care and
prudence and was nevertheless unable to file the return within
the prescribed time”. Sec. 301.6651-1(c)(1), Proced. & Admin.
Regs.
Petitioners’ 1996 return was due on August 15, 1997, upon
expiration of their filing extension. Petitioners did not
request a second extension. Instead, petitioners contend they
were not able to file their return until April 16, 1999, because
they were waiting for the final loss figure from the KPS
bankruptcy proceeding. Petitioners’ argument falls short,
however, because they knew the amount of the loans made to KPS.
In addition, petitioners could have filed a timely return and
later amended it if the information changed for any reason,
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