At trial, a taxpayer argued that she prepared her tax return using TurboTax(tm) but the IRS penalized the taxpayer with Section 6662 accuracy-related penalties after disallowing the taxpayers’ reported rental losses and recharacterizing the trading losses as capital losses. Unintentional or accidental errors as a defense was not allowed and the Tax Court stated that “tax preparation software is only as good as the information one inputs into it.” The taxpayer reported expenses for her real estate business and unrelated losses on a single Schedule C and confused capital gains and losses with ordinary income and expenses. TC Memo 2010-82.
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