Shannon D. Mullins - Page 16

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          in 2001, and it is unclear whether petitioner provided the                  
          preparer with a copy of the Schedule K-1.  Petitioner made no               
          attempt to ascertain the correct amount of tax.  Petitioner owned           
          his interest in the S corporation since 1998,8 and even if he               
          sold the business in April 2001 as he contends, a reasonable                
          taxpayer would have known he was responsible for a pro rata share           
          of the S corporation’s income.  Further, even if petitioner                 
          believed that he incurred a loss from the sale of his Edgington             
          Mullins stock, a reasonable taxpayer would have reported the                
          transaction as a capital loss.  Accordingly, we sustain a penalty           
          under section 6662.                                                         
               Reviewed and adopted as the report of the Small Tax Case               
               To reflect the foregoing,                                              

                                                  Decision will be                    
                                             entered under Rule 155.                  

               8  In his Memorandum of Authorities, respondent stated that            
          petitioner reported losses from Edgington Mullins for all years             
          prior to 2001 and that petitioner must have known that Schedule             
          K-1 items are reportable on his individual return.                          

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