- 11 - The accuracy-related penalty under section 6662(a) does not apply to any portion of an underpayment, however, if it is shown that there was reasonable cause for, and that the taxpayer acted in good faith with respect to, that portion. Sec. 6664(c)(1); sec. 1.6664-4(b), Income Tax Regs. The determination of whether the taxpayer acted with reasonable cause and in good faith depends on the pertinent facts and circumstances, including the taxpayer’s efforts to assess his or her proper tax liability and the knowledge and experience of the taxpayer. Sec. 1.6664-4(b)(1), Income Tax Regs. Petitioners argue that the penalty should not apply because they should be able to deduct expenses as other professionals are able to deduct business-related expenses. Petitioners contend that they incurred these expenses because the school district lacked the funds necessary to develop and improve their teaching abilities as an English teacher and a golf coach. While the Commissioner bears the burden of production under section 7491(c), taxpayers bear the burden of proof with regard to reasonable cause. Higbee v. Commissioner, supra at 446. We find that petitioners failed to establish that there was reasonable cause for the underpayment. We recognize that Mr. Garcia may have had good intentions when he joined the country club to give his team a place to practice golf and that some of Mrs. Garcia's expenses were incurred with her students' bestPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011