- -21
T.C. 686, 702-703 (1988), affd. 893 F.2d 656 (4th Cir. 1990);
sec. 1.6662-4(d)(3), Income Tax Regs.
Petitioner has not shown that there was substantial
authority for its position that the tire expense deduction was
properly taken. On petitioner's return for the year at issue,
the tire expense was included under the category "truck
maintenance", but was not separately listed on the return. We
hold that the tire expense deduction was not adequately disclosed
on petitioner's return.
Section 6664(c)(1) provides that the penalty should not be
imposed on any portion of an underpayment if the taxpayer shows
reasonable cause for such portion of the underpayment and that he
acted in good faith with respect to such portion. For the same
reasons we conclude that petitioner has not shown that the
provision of its contract with Nikki's that Nikki's pay for the
cost of tires used on trucks leased to petitioner was a mistake,
we conclude that petitioner has not shown reasonable cause for
its understatement of tax.
We, therefore, sustain respondent's determination of the
accuracy-related penalty under section 6662.
Decision will be entered
under Rule 155.
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