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and of the additional income to be charged to Lyell Metal and to
the shareholders thereof.
Estimated Estimated Estimated
Year Cash Purchases Cost-of-Goods Sold Additional Income
1989 $5,355,353 $14,152,140 $281,861
1990 4,428,929 12,904,848 233,101
1991 3,558,446 9,907,004 187,287
1992 3,163,897 9,443,694 166,521
Under section 6662(a), a 20-percent accuracy-related penalty
applies to underpayments of tax attributable to either negligence
or to a disregard of the rules or regulations.
Taxpayers are expected to maintain adequate records and
failure to do so may constitute negligence and a disregard of
rules or regulations. Sec. 6001; see also Schroeder v.
Commissioner, 40 T.C. 30, 34 (1963); Bard v. Commissioner, T.C.
Memo. 1990-431. Petitioners bear the burden of proof with
respect to this issue. Rule 142(a).
As indicated, for the years in issue Lyell Metal failed to
maintain complete records. Prior to 1991, Lyell Metal retained
copies of receipts reflecting its cash purchases of scrap metal
for only 8 to 12 weeks, and for all of the years in issue Lyell
Metal failed to maintain any identifying information relating to
customers to whom Lyell Metal paid cash for scrap metal. We
sustain respondent’s determination of the accuracy-related
penalties.
To reflect the foregoing,
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