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expenses.” Rule 142(a); Ronnen v. Commissioner, 90 T.C. 74, 102
(1988). Based upon the lack of any evidence provided by
petitioners, and taking into account their stipulations and
admissions, we find that they have failed to carry their burden
of proof with respect to both the deductibility and the amount of
the claimed deductions. Accordingly, we sustain respondent on
this issue.
Substantial Understatement Penalty--Michoff, Srs.
Respondent determined additions to tax of $7,339 and $2,112
under section 6661 for the tax years 1986 and 1987, respectively,
for the Michoff, Srs. Section 6661(a) imposes an addition to tax
of 25 percent of the amount of any underpayment attributable to a
substantial understatement of tax. An understatement is the
difference between the amount required to be shown on the return
and the amount actually shown on the return and is substantial if
it exceeds the greater of (1) 10 percent of the tax required to
be shown on the return for a taxable year, or (2) $5,000. Sec.
6661(b)(1) and (2)(A). The understatement is reduced to the
extent that the taxpayer has (1) adequately disclosed his or her
position or (2) has substantial authority for the tax treatment
of an item. Sec. 6661; sec. 1.6661-6(a), Income Tax Regs.
Petitioners have the burden of proving they are not liable for
the addition to tax. Rule 142(a).
The Michoff, Srs., contend that they should not be liable
for the substantial understatement penalty because their
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