- 8 -
substantial within the meaning of section 6662(d)(1)(A).4
Accordingly, we hold that respondent satisfied his burden of
production for the accuracy-related penalty based on both
negligence or disregard of rules or regulations and substantial
understatement of income tax.
We turn now to whether petitioners acted with reasonable
cause and in good faith, within the meaning of section
6664(c)(1), so as to escape liability for the accuracy-related
penalty (whether based on negligence or disregard of rules or
regulations, or on a substantial understatement of income tax).
The numbers in this case speak for themselves. Thus,
petitioners failed to report over 63 percent of the wages
received by Mr. McKee from Autocar ($13,775/$21,666). Compared
to wages received by Mr. McKee from both of his employers,
petitioners failed to report over 48 percent of Mr. McKee’s wages
($13,775/$28,587). Compared to wages received by petitioners
from all three of their employers, petitioners failed to report
over 22 percent of their total wages ($13,775/$61,903). Compared
to income received by petitioners from all sources, petitioners
failed to report over 16 percent of their total income
($13,775/$81,812).
4 The $5,574 understatement of tax exceeds $5,000 and is
43.9 percent of the tax required to be shown on petitioners’
return ($12,696; i.e. $7,122 + $5,574).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011