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Except perhaps with respect to the depreciation deductions (an
issue that we have resolved in petitioners' favor), petitioners
have proposed no findings of fact that would allow us to conclude
that petitioners acted with reasonable cause and in good faith.
The closest petitioners come is a proposed finding (which we have
declined to make): "Bruce has no accounting or tax background
and depended entirely on Giunta [a certified public accountant]
for tax reporting positions taken * * * [on petitioners' 1988 and
1989 returns]". Petitioners have failed to carry their burden of
showing that they acted with reasonable cause and in good faith
with respect to any portion of the underpayments in tax
determined by respondent for 1989 or 1990 except those portions
of such underpayments attributable to depreciation of the exotic
automobiles. See sec. 1.6664-4, Income Tax Regs.
Subject to the Rule 155 computation, section 6662(a) applies
to the whole of the underpayments determined by respondent for
1989 and 1990 except those portions attributable to depreciation
of the exotic automobiles. To that extent, respondent's
determinations of penalties under section 6662(a) is sustained.
Decision will be entered
under Rule 155.
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