The balance sheet for a Bahamian partnership in which the taxpayer invested recorded bonds at their maturity value rather than the much lower purchase price, supposedly in accordance with Bahamian generally accepted accounting principles. When the partnership disposed of the bonds at a selling price higher than its purchase price, the taxpayer recorded losses based on the selling price being lower than the maturity value.
Miller T.C.J. found that the taxpayer knowingly acquiesced in the making of an omission, i.e., filing the financial statements in his return knowing that they did not state that the cost of the bonds was recorded at maturity value rather than purchase price. However, the taxpayer's penalty was the minimal amount of $100 per annum given that the understatement of the taxpayer's income flowed from the accounting principle which had been utilized when preparing the financial statements, rather than from the taxpayer's omission.