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the return is late, not to exceed 25 percent. Sec. 6651(a)(1).
The addition is imposed for the failure to file a return on time
unless the taxpayer establishes that the failure was due to
reasonable cause and not willful neglect. Sec. 6651(a)(1);
United States v. Boyle, 469 U.S. 241, 245 (1985).
Petitioner admits that he did not file a return for 2001 but
maintains that he had reasonable cause for not filing.
Petitioner testified that he had reviewed section 104 and could
not find a basis for distinguishing damages for physical injuries
from emotional injuries. Petitioner further testified that he
had reviewed the Internal Revenue Code for several years and
could find no provision that required him to file a return.
Finally, petitioner maintains that reasonable cause is
demonstrated by the D.C. Circuit’s initial conclusion that
damages for emotional distress did not constitute gross income.
On cross-examination, petitioner admitted that he had not
reviewed the flush language of section 104(a), which provides
“emotional distress shall not be treated as a physical injury or
physical sickness” for purposes of excluding damages received
from gross income under section 104(a)(2). Petitioner further
admitted that he had not sought the advice of a tax professional
in regard to his conclusions that no provision of the Code
required him to file a return or that the damages he received
were not income.
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Last modified: November 10, 2007