Case: Taxpayers Liable for Accuracy-Related Penalties, No Reasonable Cause Defense Where CPA Did Not Provide Advice on Deficiency Items (T.C. Memo) (IRC §6662)

Taxpayers who substantially understated their income tax were liable for accuracy-related penalties under I.R.C. §6662(a) and did not satisfy the reasonable cause and good faith exception, the U.S. Tax Court held in a memorandum opinion, sustaining the IRS’s determination. Taxpayers’ understatements related to using the wrong depreciation method for real property, incorrectly reporting Social Security income, claiming duplicate mortgage interest deductions, and lacking certain requirements for charitable contribution deductions. The court held that the taxpayers did not satisfy the reasonable cause defense with respect to any of the understatements because they could not show that their CPA provided advice regarding ...