- 17 - liability. Stubblefield v. Commissioner, supra; sec. 1.6664- 4(b)(1), Income Tax Regs. On this record, the Court holds that petitioners are liable for the penalty under section 6662(a) with respect to the Schedule C car and truck expenses, travel, meals, and entertainment expenses. Mr. Viar offered the following explanation for his failure to keep contemporaneous logs and adequate records for his Schedule C expenses: “I had a rough time during that five-year period. I used to keep MacAffie receipts prior to that.” He further stated: “I think my personal problems, my medical problems, I just didn’t keep the receipts that I should have kept, and the ones I did keep, I misplaced.” Nonetheless, the applicable legal standards on deductibility and record keeping are clear, and Mr. Viar’s testimony does not support a finding of reasonable cause for the tax underpayment attributable to the items described. Petitioners are also liable for the section 6662(a) penalty with respect to the disallowed Schedule E expenses. The law is clear that the use of a dwelling unit by a family member is deemed personal. Petitioners did not exercise reasonable care in the reporting of this item, nor did they take reasonable steps to determine the law and comply with it. Respondent is sustained on the penalty for the disallowed Schedule C and Schedule E expenses.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011