Bernard Michael Reed - Page 9

               The second issue for decision is whether petitioner is                 
          liable for a penalty under section 6662(a).  This section, in               
          conjunction with subsection (b)(1), imposes an accuracy-related             
          penalty equal to 20 percent of the portion of any underpayment of           
          tax that is due to negligence.  Under section 6662(c), negligence           
          is any failure to make a reasonable attempt to comply with the              
          provisions of the Internal Revenue Code.                                    
               Petitioner failed to maintain regular and consistent records           
          of his activities, attempted to deduct personal items under the             
          guise of "business expenses", failed to substantiate a portion of           
          the deductions claimed, and misrepresented the purpose behind the           
          expenditures at trial.  On this record, we conclude that                    
          petitioner was negligent within the meaning of section 6662(b)(1)           
          with respect to the entire underpayment of tax and is liable for            
          an accuracy-related penalty under section 6662(a).  Respondent is           
          sustained on this issue.                                                    
               To reflect the foregoing,                                              
                                             Decision will be entered                 
                                             for respondent.                          

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