In Uncategorized on 02/25/2022 at 13:06

CSTJ Lewis (“Master Speller”) Carluzzo doesn’t name which software led Candice L. Busch & Randall P. Busch, Docket No. 14085-20S, filed 2/25/22 astray. But their failure to heed the old saying “take care of the pennies and the dollars will take care of themselves” costs them the Section 6662 five-and-ten chop. Candice & Ron  concede the deficiency, which resulted in the refund of all their withholding.

The software Candice used to do their year-at issue taxes only recognized the whole-dollar amount of any entry. Thus, when Candice entered the Section 163 $21,201.25 deduction (which admittedly the Buschs were entitled to), the computer printed out $2,120,125.

The Buschs claim honest mistake. And any of us could make one. I remember one year when I put the right number on the wrong line of our 1040, wrong by one line; it took a year’s worth of phonecalling to put it right.

CSTJ Lew: “As they see, they had reasonable cause and acted in good faith with respect to the entire amount of the underpayment of tax that resulted from the mistaken entry. They ask the Court to recognize, as they point out that honest mistakes are sometimes made. As a general proposition of life, we agree with petitioners on the point, and we further agree with petitioners’ suggestion that not every mistake made on a Federal income tax return should result in the imposition of an accuracy-related penalty. A person preparing a return might understandably get distracted while doing so and enter the wrong amount for an item, or if not distracted, when transferring numbers from one document to another, transpositions often occur. If a computer-based software program is being used in the process, the limitations and requirements of a software program might not be fully appreciated by the user. Any number of situations could cause an ‘honest’ mistake to be made when amounts are incorrectly reported on a Federal income tax return.” Transcript, at p. 7.


“The mistaken entry is not the real problem. Their mistake was failing to review the return carefully enough to have recognized the erroneous entry before the return was filed. After all, it should go without saying, that a taxpayer’s obligation to prepare and file a Federal income tax return includes the duty to review that return to ensure that the information reported or shown on the return is accurate before the return is filed.” Transcript, at pp. 7-8.

The mortgage interest page of the return has a couple columns (hi, Judge Holmes) to the left of all the other numbers, showing the mistake. CSTJ Lew says it sticks out like a sore thumb.

And besides stiping out the Boss Hoss sign-off (they’re pro se, of course), Candice & Ron give it away on the trial. “At trial petitioners more or less acknowledge that they failed to carefully review the return before it was forwarded to the Internal Revenue Service. It was a mistake for petitioners not to review the return carefully, or as recollected by one of them, not to review it at all after it was prepared. Their failure to review the return carefully was a careless mistake that completely undermines their claim that they acted with reasonable cause and in good faith with respect to the underpayment of tax that, as it turned out, resulted from that failure.” Transcript, at pp. 8-9.

The most dangerous part of any software program is found in front of the keyboard.

  1. “The deduction for mortgage interest shown on the return occupies at least two additional columns to the left of any other number shown on the page of the return where the deduction is claimed.”

    What are you talking about, Judge Carluzzo? There are only two columns on the 2017 Schedule A. Several possible entries go in the column to the left, and then a total of those numbers goes on the column to the right.

    Yes, we all make mistakes.


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