Gary W. McDonough - Page 16

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          production in this case, however, our review of the record leads            
          us to the same conclusion; i.e., that petitioner is liable for              
          the section 6662(h) accuracy-related penalty for 1989 and the               
          section 6662(a) accuracy-related penalty for 1991, both in the              
          amounts respondent alleged in his answer.  Thus, we need not and            
          do not discuss any further the parties’ dispute as to which of              
          them bears the burden of production in this case.                           
          2.  Sections 6662 and 6664                                                  
               a.  Overview                                                           
               Section 6662 provides that a taxpayer may be liable for a              
          20-percent accuracy-related penalty on the portion of an                    
          understatement of income tax attributable to (among other things)           
          negligence or disregard of rules or regulations or a substantial            
          understatement of income tax.  See sec. 6662(a) and (b)(1) and              
          (2).  Section 6662(h)(1) increases the amount of the section                
          6662(a) accuracy-related penalty to 40 percent in the case of               
          gross valuation misstatements.  Section 6664(c)(1) provides that            
          no accuracy-related penalty under section 6662 applies to the               
          extent that the taxpayer has reasonable cause for an underpayment           
          of tax and acted in good faith with respect to that underpayment.           
               b.  Negligence/Disregard of Rules or Regulations                       
               For purposes of section 6662(a), negligence includes any               
          failure to make a reasonable attempt to comply with the                     
          provisions of the Code or to exercise ordinary and reasonable               

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