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Accuracy-Related Penalty
Respondent determined that petitioners are liable for each
of the years 1989 and 1990 for the accuracy-related penalty under
section 6662(a) because petitioners' underpayment of tax for each
of those years was due to negligence or disregard of rules or
regulations. In the alternative, respondent determined that
petitioners are liable for that penalty for each of the years at
issue because they have a substantial understatement of income
for each of those years.
Petitioners contend that assuming arguendo that we were to
sustain respondent's position that petitioners have unreported
income for 1990 resulting from the discharge of the outstanding
balances of the Kabeiseman loans, we should nonetheless reject
respondent's determination imposing the accuracy-related penalty
for 1990 to the extent that it relates to the underpayment
attributable to any such unreported income. In light of our
holding that petitioners do not have unreported income for 1990
resulting from the discharge of the outstanding balances of the
Kabeiseman loans, we shall not address that contention.
Petitioners do not dispute, and we therefore assume that
they concede, that if we were to sustain respondent's position
that petitioners have unreported income for 1989 and 1990 result-
ing from the deposits of K & H's and Ms. Velilla's funds and the
miscellaneous deposits at issue, respondent's determination of
the accuracy-related penalty for each of those years to the ex-
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