- 17 - As a defense to the penalty, petitioner bears the burden of proving that he acted with reasonable cause and in good faith. See sec. 6664(c)(1); see also Higbee v. Commissioner, supra; sec. 1.6664-4(b)(1), Income Tax Regs. Respondent satisfied his burden of production under section 7491(a)(1) because the record shows that petitioner substantially understated his income tax for the year in issue. See sec. 6662(d)(1)(A)(ii); Higbee v. Commissioner, supra at 442. Accordingly, petitioner bears the burden of proving that the accuracy-related penalty should not be imposed with respect to any portion of the understatement for which he acted with reasonable cause and in good faith. See sec. 6664(c)(1); Higbee v. Commissioner, supra at 446. A review of this record reflects that petitioner claimed substantial deductions for which he apparently maintained no records. Further, some of the claimed deductions, like bad debts, which petitioner testified was personal interest, are clearly nondeductible personal items. Based on this entire record, we conclude that petitioner is liable for the penalty under section 6662(a). Reviewed and adopted as the report of the Small Tax Case Division. To reflect the foregoing, Decision will be entered under Rule 155.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Last modified: May 25, 2011