Sherman J. Miller and Alice K. Miller - Page 16

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            club in 1988 was for business, there is no evidence of what, if                           
            any, business use was made of the country club in 1988.                                   
                  Petitioners contend that, in any event, they are not liable                         
            for additions to tax for negligence pursuant to section                                   
            6653(a)(1)(A) and (B) for the taxable year 1987 and pursuant to                           
            section 6653(a)(1) for the taxable year 1988.  Negligence is                              
            defined as a lack of due care or a failure to do what a                                   
            reasonable and ordinarily prudent person would do under the                               
            circumstances.  Neely v. Commissioner, 85 T.C. 934, 947 (1985).                           
                  Based on the record in this case, we find that petitioners                          
            have failed to show that they were not negligent.  Petitioner                             
            failed to keep adequate records of expenditures, particularly                             
            with regard to the activities at the country club.  Petitioner                            
            had lost or misplaced some of the receipts by the time of trial.                          
            Petitioner admitted to making several mistakes in the records                             
            that he did keep.  We, therefore, find that petitioners were                              
            negligent in keeping business records to verify the expenses of                           
            the insurance business for the years at issue.                                            
                  Petitioners also contest respondent's determination of                              
            additions to tax under section 6661 for each of the years here in                         
            issue.  Section 6661(a) imposes an addition to tax of 25 percent                          
            of the underpayment attributable to a substantial understatement                          
            of income tax.  An understatement is defined as the tax required                          
            to be shown on the return less the tax shown on the return,                               
            reduced by any rebates.  Sec. 6661(b)(2).  An understatement is                           

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