Eugene A. Sanders - Page 11

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          whether a taxpayer acted with reasonable cause and in good faith            
          within the meaning of section 6664(c)(1) is made on a case-by-              
          case basis, taking into account all the pertinent facts and                 
          circumstances.  Sec. 1.6664-4(b)(1), Income Tax Regs.  The most             
          important factor is the extent of the taxpayer’s effort to assess           
          his proper tax liability for the year.  Id.  Section 1.6664-                
          4(b)(1), Income Tax Regs., specifically provides:  “Circumstances           
          that may indicate reasonable cause and good faith include an                
          honest misunderstanding of fact or law that is reasonable in                
          light of * * * the experience, knowledge and education of the               
          taxpayer.”  See Neely v. Commissioner, supra.  Reliance by the              
          taxpayer on the advice of a qualified adviser will constitute               
          reasonable cause and good faith if, under all of the facts and              
          circumstances, the reliance by the taxpayer was reasonable and              
          the taxpayer acted in good faith.  Sec. 1.6664-4(b)(1), Income              
          Tax Regs.                                                                   
               We consider “the reasonableness of the taxpayer’s actions in           
          light of his experience and the nature of the investment.”                  
          Fawson v. Commissioner, T.C. Memo. 2000-195; see also Henry                 
          Schwartz Corp. v. Commissioner, 60 T.C. 728, 740 (1973); Greene             
          v. Commissioner, T.C. Memo. 1998-101, affd. without published               
          opinion 187 F.3d 629 (4th Cir. 1999); Glassley v. Commissioner,             
          T.C. Memo. 1996-206.  Whether a taxpayer is negligent in claiming           
          a tax deduction “depends upon both the legitimacy of the                    

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