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Petitioners argue that they should not be liable for the
penalty because "They held a good faith belief that the check
exchange did not involve income to them." The facts of this case
belie any claim of good faith on petitioners’ part. Their
bookkeeper/tax return preparer advised petitioners that any
excess in their favor at the end of the year was taxable income.
Also, petitioners failed to report any of the interest and/or
broker fees either paid or credited to them by M&L. Finally,
petitioners did not keep adequate books and records, and the bank
deposits analysis shows a substantial understatement of income.
Accordingly, we hold that the entire underpayment is subject to
the section 6662 penalty.
To reflect the foregoing,
Decision will be entered for
respondent.
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