- 49 -
(CCH), pt. 20.1.1.3.1.2.5, at 45,014 (Aug. 20, 1998). The IRM
states that whether the inability to obtain necessary records
constitutes reasonable cause depends on the facts and
circumstances in each case, considering factors including: (1)
Why the records were needed to comply; (2) what steps the
taxpayers took to secure the records; (3) when the taxpayers
became aware that they did not have the necessary records; (4) if
other means were explored to secure the needed information; (5)
why the taxpayers did not estimate the information; (6) if the
taxpayers contacted the IRS for instructions on what to do about
missing information; and (7) if the taxpayers complied once the
missing information was received.
The IRM does not help petitioners. They provided no
explanation as to: (1) Why they thought that they needed the
Schedule K-1 to file their return if they were taking the
position that Mr. Dunne was not a shareholder in 1997; (2) why
they did not request a Schedule K-1 until April 15, 1998; (3)
whether they considered any other ways of obtaining the
information on the Schedule K-1; (4) why they did not estimate
the information, especially since Mr. Dunne knew about how much
income FRC earned in 1997 and, regardless of that amount,
petitioners took the position that Mr. Dunne was not an FRC
shareholder in 1997; (5) whether they contacted the IRS for
instructions and, if so, whether they followed those
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