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the taxpayer’s experience, knowledge, and education. Sec.
1.6664-4(b)(1), Income Tax Regs. Generally, the most important
factor is the extent of the taxpayer’s effort to assess his or
her proper tax liability. Stubblefield v. Commissioner, T.C.
Memo. 1996-537; sec. 1.6664-4(b)(1), Income Tax Regs.
Petitioners are no strangers to the section 6662(a)
accuracy-related penalty. This Court sustained respondent’s
determination that petitioners were liable for the section
6662(a) penalty for taxable year 2002 because of “their failure
to maintain and produce the required documentation to support
their deductions”. Jackson v. Commissioner, T.C. Memo. 2005-159.
On Schedule C of their 2000 joint Form 1040, petitioners
fully deducted startup costs incurred in 1998 and 1999 for Hansie
Productions instead of amortizing the expenditures over a period
of at least 60 months. The instructions to Schedule C clearly
state that startup expenditures must be amortized. See 2000
Instructions for Schedule C, Profit or Loss From Business,
General Instructions, Other Schedules and Forms You May Have to
File, and Part V Specific Instructions, Other Expenses; 2000
Instructions for Form 4562, Part VI--Amortization, Line 40.
Additionally, petitioners fully deducted the cost of office
furniture and equipment they purchased in 2000, some of which
they admitted was for personal use, without making the
appropriate election under section 179. The instructions to
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Last modified: March 27, 2008