- 5 -
satisfied his burden of production with respect to this penalty.
Section 6662(a) imposes a 20-percent penalty on the portion of
any underpayment of tax attributable to negligence or disregard
of rules or regulations. Sec. 6662(b)(1). Negligence is any
failure to make a reasonable attempt to comply with the
provisions of the internal revenue laws. Sec. 6662(c).
Moreover, negligence is the failure to exercise due care or
failure to do what a reasonable and prudent person would do under
the circumstances. Neely v. Commissioner, 85 T.C. 934, 947
(1985). Disregard includes any careless, reckless, or
intentional disregard of rules or regulations. Sec. 6662(c);
sec. 1.6662-3(b)(2), Income Tax Regs. No penalty will be imposed
with respect to any portion of any underpayment if it is shown
that there was a reasonable cause for such portion and that the
taxpayer acted in good faith with respect to such portion. Sec.
6664(c).
In this case, section 6664(c) has not been satisfied.
Although petitioner had access to tax advisers, nothing in the
record indicates that he had any basis for believing that he
could personally deduct the alleged expenses in issue. Such
action is not that of a prudent and reasonable person in
business. We conclude that petitioner was negligent and is
liable for the accuracy-related penalty under section 6662(a) as
determined by respondent.
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011