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purchase price of that drawing, and the gain realized from its
sale. However, assuming arguendo (1) that petitioner had told
Mr. McVeigh that he sold the drawing in question for $115,000,
that he had purchased it for $1,300, and that he realized a gain
of $113,700 from its sale and (2) that Mr. McVeigh erroneously
reported gross receipts of $100,000 from the sale of the drawing
in question, a cost of goods sold of $1,000 for that drawing, and
a gain of $99,000 from its sale, petitioner was nonetheless
negligent in underreporting the gain from that sale in his 1989
return. Petitioner had an obligation to review that return
before filing it. See Metra Chem Corp. v. Commissioner, supra at
662. Petitioner, however, did not review it; he was merely
interested in knowing the amount of tax due so that he could
write a check for that amount. If petitioner had reviewed
Schedule C of his 1989 return relating to art sales, he would
have known that the gain from the sale of the drawing in question
was underreported. See id. at 662.
On the record before us, we find that any reliance by
petitioner on Mr. McVeigh was not reasonable or in good faith
insofar as it relates to the underreporting of the gain from the
sale of the drawing in question (viz., $99,000, instead of
$113,700). Consequently, we find that petitioner is liable for
the accuracy-related penalty on the portion of the underpayment
for 1989 that is attributable to that underreported gain.
Petitioner's Claimed Disallowed
Automobile Expenses
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