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As discussed in the findings of fact, and as acknowledged
by petitioner's accountant during his testimony at trial,
the loss claimed on petitioner's amended return for
1990 duplicates the deductions claimed on petitioner's
original return for the year. There is no basis on which
petitioner is entitled to deduct the same amounts twice,
and we reject petitioner's claim to deduct the loss, as
reserved in the above-quoted stipulation.
Fraud Penalty
Respondent determined that petitioner fraudulently
omitted income in the amount of $127,889 from its 1990
return and determined that petitioner is liable for a
civil fraud penalty under section 6663 in the amount of
$32,726.25. The omitted amounts arise from the fact that,
upon Mr. Cordes' instructions, petitioner's bookkeeper
recorded bankruptcy receipts, late charge fees, and other
miscellaneous receipts as increases in account 312, a
shareholder loan account, rather than as income. Although
petitioner admits the omission of $127,889 from income,
petitioner contends that it should not be subject to the
fraud penalty for two reasons. First, petitioner contends
that it acted in good faith and with reasonable cause
because it "relied on the advice of [its] firm of Certified
Public Accountants." Second, petitioner contends that
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