- 17 - why they did not report all of petitioner wife’s income, and they could have easily checked to see when they had received the $35,000 pension distribution. Failure to keep adequate records is evidence of negligence. Marcello v. Commissioner, supra; Magnon v. Commissioner, 73 T.C. 980 (1980). A taxpayer is required to maintain records sufficient to correctly prepare his or her tax return. Sec. 1.6001-1(a), Income Tax Regs. Petitioners had insufficient records to support their claimed deduction of expenses for meals and entertainment, $6,818 in business expense deductions for petitioner wife's activities, and $22,833 in itemized deductions for unreimbursed employee expenses and personal property taxes. Petitioners contend that they were not negligent in erroneously claiming a dependency exemption for their daughter, Robin, because they did not know how much she earned. Petitioner apparently assumed without checking that they could claim an exemption for her. There is no evidence that they tried to find out how much she earned. Petitioners’ understatement of income and overstatement of deductions and the inadequacy of their records are sufficient to show that they were negligent. We conclude that petitioners are liable for the accuracy-related penalty for 1990 under section 6662(a).Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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