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accountants in Harrison v. Commissioner, supra, who computed the
taxpayers' estimated tax liability for extension purposes as
$1,408 and $2,200 for 1988 and 1989, respectively, when the
amount ultimately reported as due on the return was $96,418
(ultimately stipulated as $175,686) and $38,702 (ultimately
stipulated as $116,389), respectively. Notwithstanding these
discrepancies, we concluded that the taxpayers in Harrison had
reasonable cause for late filing as a result of their reliance on
their accountants to perform the calculations of estimated tax
necessary to obtain extensions.
Finally, as noted above, the regulations provide that an
isolated computational error generally is not inconsistent with
reasonable cause and good faith. The error underlying
petitioner's income omission of $173,093, wherein his accountants
failed to remove that amount from salaries generally when they
separately stated it as officer compensation in the
electronically stored version of petitioner's S corporation's
Form 1120S, resembles the kind of isolated computational error
generally intended to give rise to relief.
We accordingly hold that petitioner had reasonable cause for
the understatement attributable to his failure to report $173,093
of income from Windsor in 2001.
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