- 13 -
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). As such, we
sustain respondent’s determination that petitioner is liable for
an addition to tax under section 6651(a)(1), and we conclude that
the amount of the addition should be computed based upon a filing
date of November 2, 2002.
2. Accuracy-related Penalty Under Section 6662
Section 6662(a) provides that a taxpayer may be liable for a
penalty of 20 percent of the portion of an underpayment of tax
attributable to (1) a substantial understatement of tax or (2)
negligence or disregard of rules or regulations. Sec. 6662(a)
and (b)(1) and (2). The accuracy-related penalty does not apply
to any portion of an underpayment of tax if it is shown that
there was reasonable cause for such portion and that the taxpayer
acted in good faith. Sec. 6664(c)(1).
An “understatement of tax” is substantial if it exceeds the
greater of 10 percent of the tax required to be shown on the
return or $5,000. Sec. 6662(d)(1) and (2).
“Negligence” is defined as any failure to make a reasonable
attempt to comply with the provisions of the Internal Revenue
Code. Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.
Generally, a taxpayer is negligent if he or she fails to make a
reasonable attempt to ascertain the correctness of a deduction,
credit, or exclusion on a tax return that would seem to a
reasonable and prudent person to be “too good to be true”. Sec.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011