Elizabeth Lai - Page 22

                                       - 22 -                                         
          Sec. 6662(d)(1)(A).  The term “negligence” in section 6662(b)(1)            
          includes any failure to make a reasonable attempt to comply with            
          the Code.  Sec. 6662(c).  Negligence has also been defined as the           
          failure to exercise due care or the failure to do what a                    
          reasonable person would do under the circumstances.  See Allen v.           
          Commissioner, 92 T.C. 1, 12 (1989), affd. 925 F.2d 348, 353 (9th            
          Cir. 1991); Neely v. Commissioner, 85 T.C. 934, 947 (1985).  The            
          term “disregard” includes any careless, reckless, or intentional            
          disregard.  Sec. 6662(c).  Failure to keep adequate records may             
          be evidence not only of negligence, but also of intentional                 
          disregard of regulations.  See sec. 1.6662-3(b)(1) and (2),                 
          Income Tax Regs.; see also Benson v. Commissioner, T.C. Memo.               
               In the matter before us, respondent has met the burden of              
          production imposed on him by section 7491(c).  Respondent has               
          shown that petitioner failed to keep adequate records for the               
          years at issue.  To avoid application of the penalty, petitioner            
          must therefore demonstrate that the underpayments of tax for                
          1999, 2000, and 2001 were due to reasonable cause and good faith.           
          See sec. 6664(c)(1); Higbee v. Commissioner, supra at 449.                  
               The decision as to whether a taxpayer acted with reasonable            
          cause and in good faith depends upon all the pertinent facts and            
          circumstances.  Sec. 1.6664-4(b)(1), Income Tax Regs.  Relevant             
          factors include the taxpayer’s efforts to assess his or her                 

Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next 

Last modified: November 10, 2007