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for the vaults was discovered after the returns in question were
filed, and it was raised during the administrative audit. The
accountant conducted a random sampling of the universe of
invoices and was able to arrive at an average cost of $150 per
vault. He also was able to determine that the average cost to
install the vaults should have been $50 each. Through this
methodology, it was established that the corporation had an
$800,000 (4,000 x $200) unrecorded liability.
Petitioners have carried their burden of showing the
existence of Resthaven's unrecorded burial vault liability of
$800,000. Consequently, petitioners did not receive dividend
income in the amounts determined by respondent during the years
in issue.
Negligence
Respondent determined that petitioners are liable for
additions to tax and a penalty for negligence or intentional
disregard of rules or regulations during the years at issue,
under their respective sections in 1987, 1988, and 1989.
Petitioners have the burden of showing that they were not
negligent with respect to their tax returns at issue. Rule
142(a); Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).
Negligence is a "lack of due care or failure to do what a
reasonable and ordinarily prudent person would do under the
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