- 17 -
Other Expenses
The only other Schedule C expenses for which petitioners
offered evidence were statements billing for Internet service
from March 4, 2002, through January 3, 2003, and cellular
telephone service for March through December of 2002.
Petitioners, however, offered no evidence to show that the
expenses were not personal, that they were incurred primarily to
benefit their business, and that there was a proximate
relationship between each claimed expense and the business. See
sec. 262; Walliser v. Commissioner, supra.
Accuracy-Related Penalty
Section 7491(c) imposes on the Commissioner the burden of
production in any court proceeding with respect to the liability
of any individual for penalties and additions to tax. Higbee v.
Commissioner, 116 T.C. 438, 446 (2001); Trowbridge v.
Commissioner, T.C. Memo. 2003-164, affd. 378 F.3d 432 (5th Cir.
2004). In order to meet the burden of production under section
7491(c), the Commissioner need only make a prima facie case that
imposition of the penalty or addition to tax is appropriate.
Higbee v. Commissioner, supra.
Respondent determined that petitioners are liable for
accuracy-related penalties under section 6662(a). Section
6662(a) imposes a 20-percent penalty on the portion of an
underpayment attributable to any one of various factors,
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: March 27, 2008