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income in 2001 all $201,919 of the sugar beet crop insurance
proceeds received in 2001.
Under section 6662(b)(1), a taxpayer may be liable for a
20-percent accuracy-related penalty where a tax underpayment was
related to negligence or to disregard of Federal income tax rules
or regulations.
However, if there was reasonable cause for the underpayment
and the taxpayer acted in good faith, the taxpayer will not be
liable for the accuracy-related penalty. Sec. 6664(c)(1); sec.
1.6664-4(b), Income Tax Regs.
In light of the difficult interpretation of section 451(d)
at issue herein, we exercise our discretion not to sustain the
section 6662(b)(1) penalties determined by respondent. We
believe petitioners acted with reasonable cause and in good faith
in reporting in 2002 the crop insurance proceeds received in
2001.
To reflect the foregoing,
Decisions will be entered
under Rule 155.
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Last modified: March 27, 2008