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hardship is defined as more than an inconvenience to the
taxpayer. Sec. 1.6161-1(b), Income Tax Regs. An undue hardship
will result to the taxpayer if, for instance, he or she will
suffer a substantial financial loss; for example, a loss due to
the sale of property at a distress price. Downing v.
Commissioner, 118 T.C. at 29; see also Fran Corp. v. United
States, 164 F.3d 814, 816-817 (2d Cir. 1999).
As previously discussed, petitioners’ alleged hardships did
not amount to reasonable cause. Furthermore, petitioners
reported a $531,661 capital gain on the sale of their properties,
and the Court declines to believe they would have suffered a
substantial financial loss had they paid their liability timely.
Petitioners were aware they would have a substantial tax
liability for the year 1999, and, even if they were unsure of the
exact amount, they could have submitted an estimated payment when
they filed their request for an extension. Therefore, respondent
is sustained.
Lastly, the Court reviews the Appeals officer’s decision to
sustain respondent’s section 6654 determination. A taxpayer is
subject to this addition to tax “in the case of any underpayment
of estimated tax by an individual.” Sec. 6654. Subject to
certain statutory exceptions, the addition to tax is
automatically applied if the amount of withholding and estimated
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