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of income on a return has been found to be indicative of
negligence. Anders v. Commissioner, 68 T.C. 474, 493 (1977).
Individual petitioners knew that they received interest
income from the Standard Chartered account. In addition, the
Standard Chartered account had a substantial balance and earned a
significant amount of interest. However, petitioners did not
inform their accountant about the interest income or the
existence of the account. The bank statements from the Standard
Chartered account were addressed to both petitioner husband and
Lily Chan. For a time, the statements were sent to the Eastimpex
office. During the years in issue, the statements were mailed to
an address in Hong Kong. Petitioner husband gave inconsistent
testimony about where Lily was living during the years in issue.
Individual petitioners maintain that they reasonably relied
on the Eastimpex bookkeepers to provide tax information to their
tax return preparer because they received mail regarding personal
finances at Eastimpex. However, individual petitioners admitted
that they received mail regarding interest income at their
personal address as well as at Eastimpex's offices. Thus, we
reject petitioners' contention that their failure to report the
interest income was a reasonable oversight. We find that
individual petitioners are negligent and lack substantial
authority with regard to their failure to report interest income
from the Standard Chartered account and are liable for the
additions to tax.
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