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petitioners’ income. Petitioners signed and filed the return in
April 2002.
Respondent sent petitioners a notice of proposed adjustments
in July 2003, proposing to include the $23,800 in petitioners’
income. The notice also proposed an accuracy-related penalty.
Petitioners agreed to include the $23,800 in income and promptly
paid the tax attributable thereto. Petitioners did not agree to
the penalty, however, and respondent issued a notice of
deficiency in June 2004, determining a $1,315 penalty under
section 6662(a).
Discussion
A taxpayer is liable for an accuracy-related penalty of 20
percent of any part of an underpayment attributable to negligence
or disregard of rules or regulations. Sec. 6662(a) and (b)(1).
The term “negligence” includes any failure to make a reasonable
attempt to comply with the provisions of the internal revenue
laws or to exercise ordinary and reasonable care in the
preparation of a tax return. Sec. 6662(c); Gowni v.
Commissioner, T.C. Memo. 2004-154. The term “disregard” includes
any careless, reckless, or intentional disregard. Sec. 6662(c);
sec. 1.6662-3(b)(2), Income Tax Regs.
The accuracy-related penalty does not apply to any part of
an underpayment for which there was reasonable cause and with
respect to which the taxpayer acted in good faith. Sec.
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Last modified: May 25, 2011