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reasonable cause * * * and that the taxpayer acted in good
faith”. Sec. 6664(c)(1). Whether the taxpayer acted with
reasonable cause and in good faith is determined by the relevant
facts and circumstances and the extent to which the taxpayer
attempted to assess the proper tax liability. Sec.
1.6664-4(b)(1), Income Tax Regs.; see also Neely v. Commissioner,
85 T.C. 934 (1985); Stubblefield v. Commissioner, T.C. Memo.
1996-537.
We find petitioner’s claim of the dependency exemption
deduction was in good faith but based on a mistaken view of the
law. Petitioner consistently asserted that he had custody of
both of his children for the greater portion of the calendar
year. Respondent’s determination of the accuracy-related penalty
under section 6662 is not sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent as to the deficiency
and for petitioners as to the
penalty under section 6662.
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Last modified: May 25, 2011