T.C. Memo. 2012-254



                            UNITED STATES TAX COURT



                 BRENDA FRANCES BARTLETT, Petitioner v.
              COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 22669-10.                            Filed September 4, 2012.



      Brenda Frances Bartlett, pro se.

      Michael T. Garrett, for respondent.



                              MEMORANDUM OPINION


      JACOBS, Judge: Respondent determined a $43,668 deficiency in

petitioner’s 2008 Federal income tax and an $8,734 accuracy-related penalty under

section 6662(a).1



      1
          All section references are to the Internal Revenue Code in effect for 2008.
                                         -2-

[*2]                                 Background

       There are no facts in dispute. Petitioner resided in Colorado when she filed

her petition. In 2008 petitioner, then 50 years of age, retired from Qwest

Communications, where she had worked for 27 years, the last 7 of which as a

customer communications technician.

       Using the TurboTax program to file her Form 1040, U.S. Individual Income

Tax Return, for 2008, she reported the following amounts of income:

             Wages                                   $43,831

             Interest                                    207

             State tax refund                            659

             Pension gross amount                    223,870

             Pension taxable amount                  119,400

             Other income                              2,250
                                                     ______
               Total                                 166,347

       The $223,870 reported as the gross amount of pension distributions on line

16(a) of petitioner’s return is incorrect. Petitioner actually received $221,398 in

retirement distributions from State Street Retirement Services in 2008. The
                                           -3-

[*3] difference, $2,472, represents the misreporting of $224 in additional wage

income and $2,250 in additional other income.2

      The $119,400 reported as the taxable amount of the pension distributions on

line 16(b) of petitioner’s return is also incorrect; the correct amount is the same as

the gross amount, i.e., $221,398. Consequently, on line 16(b) petitioner

underreported the taxable amount of her pension distributions by $101,998.3

      In addition, petitioner underreported her wage income by $224 and the amount

of other income by $2,250. The correct total income petitioner received in 2008 was

$270,819.

      Petitioner reported a total tax liability of $44,619. This amount included the

10% additional tax under section 72(t) for the $119,400 reported as the taxable

amount in retirement distributions. Respondent determined that petitioner’s correct

tax liability for 2008 was $88,287, which included the section 72(t) additional tax for

the correct taxable amount in retirement distributions. This resulted in an


      2
          The $2 difference is due to rounding errors.
      3
        Petitioner used $50,000 of the retirement distributions to purchase two bank
CDs, one a 7-month CD for $25,000, and the second an 18-month CD for $25,000.
Petitioner claims that the $50,000 so used constitutes a qualified IRA rollover
contribution and hence is nontaxable. See sec. 408(d)(3)(A)(i). Petitioner’s
position is not correct because the $50,000 was not rolled over into an qualified IRA
or a qualified individual retirement annuity.
                                           -4-

[*4] understatement of income tax of $43,668. Because the understatement of

income tax was greater than $5,000 as well as greater than 10% of the tax required

to be shown on the return, respondent determined that petitioner substantially

understated her income tax and was liable for an accuracy-related penalty under

section 6662(a). See sec. 6662(d).

        Petitioner admits that her income was misreported and that her taxable income

was underreported. She maintains that she reported all of her income and that the

mistakes made were “honest mistakes” resulting from her lack of familiarity with the

TurboTax program. Petitioner claims she used the audit portion of the TurboTax

program, believing the audit portion would catch any mistakes she otherwise might

make.

                                        Discussion

        Petitioner acknowledges she received all the income determined by

respondent. She claims she relied on TurboTax to properly prepare her 2008 income

tax return and thus she was not negligent because there was reasonable cause for the

underpayment. See secs. 6662(c), 6664(c).

        It is apparent that a portion of the information petitioner entered into the

TurboTax program was incorrect; hence the mistakes made (which resulted in the

underpayment) were made by petitioner, not TurboTax. TurboTax is only as good
                                         -5-

[*5] as the information entered into its software program. See Bunney v.

Commissioner, 

, 267 (2000). Simply put: garbage in, garbage out.

      Petitioner’s errors were not merely isolated computational or transcription

errors. See sec. 1.6664-4(b)(1), Income Tax Regs. Petitioner systematically

underreported her income and this resulted in an underpayment of tax on her

Federal tax return. Petitioner did not have reasonable cause for any portion of the

resulting underpayment. Respondent’s determinations as to both the tax deficiency

and penalty are sustained.


                                                           Decision will be entered

                                                    for respondent.