In Uncategorized on 12/11/2012 at 18:32

This remark, attributed to Voltaire on his deathbed when an abbé approached him and said he came from God, should be remembered by Tax Court litigants seeking to have Tax Court cut them some slack from penalties via Section 6664(c), the “reasonable cause and good faith” out, principally evidenced by reliance on advisors.

So many times taxpayers, usually but not exclusively pro se, claim they relied on a preparer, but introduce no evidence as to the show-and-tell they had with the preparer, or what, if any, credentials the preparer possessed.

Today’s reiteration of this lesson, which I previously expounded in my blogpost “Another Argument”, 6/7/12, among other places, is Carnell Specks and Cheryl Specks, 2012 T. C. Memo. 343, filed 12/11/12.

Nothing novel here in point of law. On the facts, Carnell, a police officer in the fair metropolis of Houston, TX, the residence of the most wonderful child in the world, my granddaughter, moonlights as a security provider, marching about in uniform with personal six-shooter at his side. On the facts, he’s an IC, not an EE, so owes SE, but didn’t pay.

IRS attacks his deduction for rental real estate losses in their answer, so IRS has burden of proof. Carnell establishes material participation, IRS concedes all his rental activity as a single activity, but Carnell can’t show 750 hours, as he’s too busy policing and securitizing. So he’s got the $25K limit under Section 469(i), rather than the $51K he claimed.

Looks like substantial understatement after the Rule 155.

But Carnell says he relied on his preparer, a many-times-told tale. Again, no credentials in evidence, or what Carnell (Cheryl did nothing) told the preparer. So no dice.

One would hope the message finally gets through. IRS has a link on its website which purports to instruct taxpayers how to find a preparer. Maybe the “how to” should include what to tell the preparer, and warn the taxpayer to get the preparer’s resume.

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