In this case, the Commissioner determined a deficiency in Federal income tax of over $30,000 and an accuracy-related penalty under section 6662(a) of over $7,000 for the Navaid’s 2010 taxable year. Navaid was sentenced to prison for siphoning medications from the Department of Veteran’s affairs into his own private pharmacy, and during his time, a number of actions were taken in his IRA account. Thus, Navaid did not report his the turnover of his account in his tax return, and as a result, did not act with reasonable cause and in good faith. Therefore, the Court decided to impose an accuracy-related penalty for an underpayment in 2010.
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Posted by Pooja Shivaprasad, Associate Editor, Wealth Strategies Journal