17
Failure to keep adequate records is some evidence of
negligence. Marcello v. Commissioner, supra at 507; Magnon v.
Commissioner, 73 T.C. 980, 1008 (1980). Petitioner did not
maintain adequate records regarding the funds disbursed to or
received from Finnimore. Petitioner argues that he loaned funds
to Finnimore; yet, none of the advances carried the indicia of a
loan.
Petitioner offered no evidence connecting his nutritional
system to computer software or any other research or experiment.
Petitioner deducted items for the business use of his home, but
he failed to produce evidence supporting the deductions.
We conclude that the underpayments for the taxable years
1988 and 1989 are attributable to negligence.
Addition to Tax Under Section 6661
Respondent determined that petitioner is liable for an
addition to tax under section 6661 for the taxable year 1988.
Section 6661(a) provides for an addition to tax equal to 25
percent of the amount of any underpayment attributable to a
substantial understatement of income tax. Pallottini v.
Commissioner, 90 T.C. 498, 501 (1988). An understatement is
substantial if it exceeds the greater of $5,000 or 10 percent of
the tax required to be shown on the return. Sec. 6661(b). The
amount of the understatement may be reduced under section
6661(b)(2)(B) for amounts adequately disclosed or supported by
substantial authority. Respondent's determination of the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011