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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. While the Commissioner bears
the burden of production under section 7491(c), the taxpayer
bears the burden of proof with regard to reasonable cause.
Higbee v. Commissioner, supra at 446.
Petitioner has not demonstrated that he failed to
substantiate his claimed deductions in spite of good faith or
with reasonable cause. Petitioner also failed to address at
trial the issue of his liability for the accuracy-related
penalty. Therefore, the Court finds petitioner is liable for an
accuracy-related penalty under section 6662.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
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Last modified: May 25, 2011