Alex and Tonja Oria - Page 9
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Commissioner, 115 T.C. 523, 542 (2000). Negligence includes any
failure to make a reasonable attempt to comply with the
provisions of the internal revenue laws or to exercise ordinary
and reasonable care in the preparation of a tax return. Sec.
1.6662-3(b)(1), Income Tax Regs.
The Commissioner bears the burden of production with respect
to the accuracy-related penalty. Sec. 7491(c). In order to meet
that burden, the Commissioner must produce sufficient evidence
that it is appropriate to impose the penalty. Higbee v.
Commissioner, 116 T.C. 438, 446 (2001). We may take a taxpayer’s
concession into account in determining whether the Commissioner
has carried his burden. See, e.g., Rogers v. Commissioner, T.C.
Memo. 2005-248. Petitioners have conceded that they understated
their taxable income on account of: (1) erroneous credits to Mr.
Oria’s drawing account resulting from fictitious payments to Mr.
Loeser or one of his affiliates, (2) Mr. Oria’s personal expenses
charged on Medico’s American Express card, (3) Mr. Oria
depositing Medico’s receipts into his personal account, and (4)
Medico’s payment of Mr. Oria’s golf club and other personal
expenses. Petitioners’ concessions are sufficient for us to
conclude that respondent has carried his burden. Mr. Oria signed
all of Medico’s checks issued in 2000, and he generally performed
all duties connected with its business. Given Mr. Oria’s
business degree, his experience in business, and his knowledge of
both Medico’s and his own affairs, petitioners’ tax treatment of
the conceded items is not plausible. Mr. Oria failed to use the
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Last modified: November 10, 2007