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sufficient knowledge to understand, and in fact knew, the benefits
flowing to them by Mr. Arthur’s acts. They could have objected to
the writeoff but either affirmatively acquiesced in it or purposely
chose to be silent. Accordingly, we conclude that petitioners had
no reasonable cause for omitting income realized from the discharge
of indebtedness. We therefore hold that the underpayment of tax
was due to petitioners’ negligence and disregard of rules or
regulations.
To reflect the foregoing,
Decision will be entered
for respondent.
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