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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).
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