CSTJ Lewis (“Wotta Name!”) Carluzzo returns to the words of Scotland’s Greatest, as he absolves from Section 6662(a) accuracy chops Todd A. Minarich and Judy A. Minarich, 2021 T. C. Sum. Op. 17, filed 7/1/21.

Todd and Judy were light on recordkeeping, relying on QuickBooks and the usual miscellany of receipts, bank statements, credit card slips, and testimony (some of which actually passes muster as he processes “distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, is the daily grist of judicial life,” as Judge Vasquez said often).

Todd and Judy are bound for a Rule 155 on the impacts of this opinion on their Sub S real estate and gluten-free baking products operation, but the QuickBooks downloads and the paper miscellany carry the day on the chops, even though the QuickBooks download itself never got into evidence.

“Petitioners engaged a paid income tax return preparer to prepare their Federal income tax returns for the years in issue. They furnished their return preparer with the source documents underlying the deductions claimed on their returns along with the [Sub S] QuickBooks reports before each return was drafted. Considering all the facts and circumstances, we find that petitioners have shown reasonable cause and that they acted in good faith in respect of the underpayments of tax. Therefore, we hold that petitioners are not liable for a section 6662(a) accuracy-related penalty for either year in issue.” 2021 T. C. Sum. Op. 17, at pp.14-15.

Of course, this is a “don’t quote me” small-claimer and Todd and Judy seem to have told a good tale on the stand. The qualifications of the paid preparer are nowhere stated, so apparently CSTJ Lew thought they were good enough, whatever they were, as the preparer never testified.

Takeaway- The download from QuickBooks or its ilk might bail out your client from chops in a small-claimer, but I wouldn’t stake much on it in a regular case.