Albert R. Matthews - Page 16

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          to file was due to reasonable cause and not willful neglect.  See           
          Higbee v. Commissioner, supra at 447.  Petitioner did not argue             
          that his failure to file was due to reasonable cause, nor is                
          there any evidence in the record to suggest that petitioner’s               
          failure to file was due to reasonable cause.  Accordingly, we               
          sustain the additions to tax under section 6651(a)(1).                      
          III.  Penalties for Underpayment of Tax                                     
               Section 6662 provides that a taxpayer may be liable for a              
          penalty of 20 percent of the portion of an underpayment of tax              
          (1) attributable to a substantial understatement of tax or (2)              
          due to negligence or disregard of rules or regulations.  A                  
          substantial understatement of tax occurs where the understatement           
          exceeds the greater of 10 percent of the tax required to be shown           
          or $5,000.  Sec. 6662(d)(1)(A).  “Negligence” is defined as any             
          failure to make a reasonable attempt to comply with the                     
          provisions of the Internal Revenue Code and includes any failure            
          by the taxpayer to keep adequate books and records or to                    
          substantiate items properly.  Sec. 6662(c); sec. 1.6662-3(b)(1),            
          Income Tax Regs.  “Disregard” includes any careless, reckless, or           
          intentional disregard.  Sec. 6662(c).                                       
               A taxpayer may avoid the accuracy-related penalty with                 
          respect to any portion of an underpayment of tax if the taxpayer            
          acted with reasonable cause and good faith under section                    
          6664(c).  The determination of whether the taxpayer acted with              






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