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where escrow arrangement was bona fide deferred payment agreement
between buyer and seller), revg. T.C. Memo. 1982-734
Based on the record, the Court finds that petitioner
retained an interest in the Heritage and Citibank bank accounts
in 2002, and therefore such income is includable in her gross
income. The Court further finds that the interest income from
the escrow account at the Harris Community Bank is not includable
in petitioner’s gross income for 2002.
III. Section 6651(a)(1) Addition to Tax
Section 6651(a)(1) imposes an addition to tax equal to 5
percent of the amount required to be shown as tax on a return for
each month or fraction thereof past the prescribed due date in
which the return is not filed, not to exceed a total of 25
percent. Generally, the amount of the addition to tax under
section 6651(a)(1) is reduced by the amount of any addition to
tax imposed under section 6651(a)(2) (which relates to failure to
pay the tax shown on a return by the prescribed date) with
respect to each month in which both are otherwise applicable.
Sec. 6651(c)(1).
A taxpayer may avoid the addition to tax under section
6651(a)(1) if he establishes that the failure to file is due to
reasonable cause and not due to willful neglect. “Reasonable
cause” requires the taxpayer to demonstrate that he exercised
ordinary business care and prudence and was nonetheless unable to
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