Edward and Ruth Kelly - Page 18

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            petitioners' 1986 and 1987 returns, the revenue agent examined an                             
            expense diary for 1986.  This diary and possibly other records as                             
            well were lost by Mr. Kelly in the course of an office move.                                  
            The regulations provide an exception to the normal substantiation                             
            requirements where the taxpayer can establish that at one time he                             
            possessed adequate records and that his inability to produce them                             
            is attributable to fire, flood, or other casualty beyond his                                  
            control.  In such cases the taxpayer may satisfy his burden of                                
            proof by reasonably reconstructing his records.  Sec. 1.274-                                  
            5(c)(5), Income Tax Regs.  It is doubtful that loss of                                        
            documentation in transit is a casualty beyond the taxpayer's                                  
            control within the meaning of section 1.274-5(c)(5), Income Tax                               
            Regs.  Gizzi v. Commissioner, 65 T.C. 342, 345 (1975); Silver v.                              
            Commissioner, T.C. Memo. 1972-102.  In any event, Mr. Kelly has                               
            not attempted to reconstruct the lost records.                                                
            4(a)  Additions to Tax for 1986 and 1987                                                      
                  Respondent determined that petitioners are liable for                                   
            additions to tax for negligence under section 6653(a) for taxable                             
            years 1986 and 1987.  Section 6653(a) provides for an addition                                
            to tax if any part of an underpayment of tax is attributable to                               
            negligence.  The amount of the addition is 5 percent of the                                   
            entire underpayment plus 50 percent of the interest payable with                              
            respect to the portion of the underpayment attributable to                                    
            negligence.  Sec. 6653(a)(1)(A) and (B).  Negligence is defined                               

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