Leonhart v. CIR
| Decision Date | 25 August 1969 |
| Docket Number | No. 13122.,13122. |
| Citation | 414 F.2d 749 |
| Parties | William H. LEONHART and Martha C. Leonhart, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
David B. Rudow, Baltimore, Md. (Harry Adelberg, Baltimore, Md., on brief), for petitioners.
Issie L. Jenkins, Atty., Dept. of Justice (Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson and Harry Baum, Attys., Dept. of Justice, on brief), for respondent.
Before SOBELOFF, WINTER and CRAVEN, Circuit Judges.
This is an appeal from a judgment of the Tax Court against the taxpayers. The Commissioner determined that the taxpayers, William H. Leonhart and Martha C. Leonhart, had understated their tax liability for the years 1960 and 1961. He assessed them for a deficiency and for the five percent penalty authorized by section 6653(a), I.R.C.1954, in cases in which the underpayment "is due to negligence or intentional disregard of rules and regulations."
The deficiency and penalty arise from the tax liability of Leonhart, Inc., which was, in the years in question, a Subchapter S corporation, with William H. Leonhart as sole shareholder. Taxpayers sought Tax Court review of this action and the court resolved twelve separate issues raised by the taxpayers. On this appeal they challenge only two of the rulings. We reject the taxpayers' contentions and affirm the Tax Court.
As to the first issue, the asserted deficiency stemming from a change in accounting method in the year 1960, we affirm on the opinion of the Tax Court.
The second issue requires brief elaboration of the Tax Court opinion since certain arguments made in this court and apparently also in the Tax Court should be answered. The question raised is whether the Commissioner was correct in assessing the taxpayers for a penalty under section 6653(a), which provides that "if any part of any underpayment * * * of any tax * * is due to negligence or intentional disregard of rules and regulations (but without intent to defraud), there shall be added to the tax an amount equal to 5 percent of the underpayment." The penalty arises from certain deductions made from the income of the Subchapter S corporation. It was imposed in respect to that portion of the underpayment of tax for 1960 and 1961 attributable to deductions claimed by petitioners on grounds which, in the words of the Tax Court, were "obviously untenable." Among these deductions were payments for...
To continue reading
Request your trial
-
Rasmussen v. Commissioner
...in good faith. See, e.g., Betson v. Commissioner [86-2 USTC ¶ 9826], 802 F.2d at 372; Leonhart v. Commissioner [69-2 USTC ¶ 9597], 414 F.2d 749 (4th Cir. 1969), affg. per curiam [Dec. 28,975(M)] T.C. Memo. 1968-98. However, the record in this case does not adequately disclose the extent and......
-
Dixon v. Commissioner
...they would also have to show that the advice was based upon all of the facts. Leonhart v. Commissioner [69-2 USTC ¶ 9597], 414 F.2d 749, 750 (4th Cir. 1969), affg. a Memorandum Opinion of this Court [Dec. 28,975(M)]. Petitioners testified very little about disclosures made to return prepare......
-
Neonatology Assocs., P.A. v. Comm'r of Internal Revenue, 1201–97
...taxpayer's purposes for entering into the underlying transaction. See sec. 1.6664–4(c)(i), Income Tax Regs.; see also Leonhart v. Commissioner, 414 F.2d 749 (4th Cir.1969), affg. T.C. Memo.1968–98. Reliance may be unreasonable when it is placed upon insiders, promoters, or their offering ma......
-
Boyer v. Commissioner
...Cir. 1986), affg. in part and revg. in part [Dec. 41,219(M)] T.C. Memo. 1984-264; Leonhart v. Commissioner [69-2 USTC ¶ 9597], 414 F.2d 749 (4th Cir. 1969), affg. per curiam [Dec. 28,975(M)] T.C. Memo. 1968-98. However, petitioners did not call their accountants as witnesses, and the record......