- 7 -
provisions of the Internal Revenue laws, and the term "disregard"
includes any careless, reckless, or intentional disregard of
rules or regulations. Negligence is the lack of due care or
failure to do what a reasonable and ordinarily prudent person
would do under the circumstances. See Neely v. Commissioner, 85
T.C. 934, 947 (1985). Negligence also includes any failure by
the taxpayer to keep adequate books and records or to
substantiate items properly. Sec. 1.6662-3(b)(1), Income Tax
Regs. Under section 6664(c), no penalty shall be imposed under
section 6662(a) with respect to any portion of an underpayment if
it is shown that there was a reasonable cause for such portion
and that the taxpayer acted in good faith with respect to such
portion. The determination of whether a taxpayer acted with
reasonable cause and in good faith depends upon the facts and
circumstances of each particular case. Sec. 1.6664-4(b)(1),
Income Tax Regs. Relevant factors include the taxpayer's efforts
to assess his or her proper tax liability, the knowledge and
experience of the taxpayer, and reliance on the advice of a
professional, such as an accountant. Drummond v. Commissioner,
T.C. Memo. 1997-71, affd. in part and revd. in part without
published opinion 155 F.3d 558 (4th Cir. 1998). However, the
most important factor is the extent of the taxpayer's effort to
determine the taxpayer's proper tax liability. Sec. 1.6664-
4(b)(1), Income Tax Regs. An honest misunderstanding of fact or
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011