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Petitioners provided the Court with no information
indicating when their investment became worthless. In fact,
petitioners did not claim a capital loss on their 2000 Federal
income tax return, indicating that their investment did not
become worthless in 2000. Without this information, we cannot
determine whether petitioners had the ability to pay their tax
liability when it was due.
There is no evidence in the record regarding whether
petitioners exercised ordinary business care and prudence in
monitoring their investment. Additionally, given that petitioner
was a self-employed real estate developer and contractor, we do
not find credible his testimony that he thought investing with
Merrill Lynch was the same thing as depositing the money with a
bank.
Petitioners have not established that they made a
“reasonable efforts to conserve sufficient assets in marketable
form”. See sec. 301.6651-1(c)(1), Proced. & Admin. Regs.
Petitioners have failed to show that their failure to timely pay
the amount of tax shown on their return was due to reasonable
cause and not due to willful neglect. Therefore, we hold that
petitioners are liable for an addition to tax under section
6651(a)(2) as respondent determined.
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Last modified: November 10, 2007