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Sec. 6662(b)(1). For purposes of section 6662, the term
“negligence” includes “any failure to make a reasonable attempt
to comply with the provisions of * * * [the Code], and the term
‘disregard’ includes any careless, reckless, or intentional
disregard.” Sec. 6662(c). “Negligence” also includes any
failure by a taxpayer to keep adequate books and records or to
substantiate items properly. Sec. 1.6662-3(b), Income Tax Regs.
An accuracy-related penalty is not imposed with respect to
any portion of the underpayment as to which the taxpayer acted
with reasonable cause and in good faith. Sec. 6664(c)(1); see
Higbee v. Commissioner, supra at 448. This determination is made
based on all the relevant facts and circumstances. Higbee v.
Commissioner, supra at 448; sec. 1.6664-4(b)(1), Income Tax Regs.
“Relevant factors include the taxpayer’s efforts to assess his
proper tax liability, including the taxpayer’s reasonable and
good faith reliance on the advice of a professional such as an
accountant.” Higbee v. Commissioner, supra at 448-449.
Petitioners have failed to keep adequate records or to
substantiate properly the items in question. Respondent has
provided sufficient evidence to meet his burden of production.
Petitioners have not produced evidence to prove that respondent’s
determination of negligence is incorrect. We hold that
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Last modified: May 25, 2011