-55-
where, as here, petitioner's testimony at trial does not agree
with the return that he filed.
The unexplained inconsistency between petitioner's testimony
and the return, coupled with his failure to produce any
corroborating evidence of his alleged collection activities,
casts doubt upon petitioner's credibility. Furthermore,
petitioner's testimony that he sold the house and took the note
is contrary to Development's records, which show Development sold
the house and later distributed the note to him. Thus, there is
no credible evidence of petitioners' basis in the note, if any,
or that they suffered losses in the amounts from the sources they
reported on their return.
On the basis of the entire record, we simply do not believe
that petitioners suffered the losses they reported. We find,
therefore, that petitioners have not met their burden of proving
they actually incurred any losses. We hold that respondent is
sustained on this determination.
Issue 6. Whether Petitioners Are Liable for an Accuracy-Related
Penalty Pursuant to Section 6662 for 1989, 1990, and 1991.
Respondent determined that petitioners are liable for an
accuracy-related penalty pursuant to section 6662 for 1989, 1990,
and 1991. Respondent asserts that the section 6662 penalty is
due to either a substantial understatement of tax, or negligence
or disregard of rules or regulations. Sec. 6662(b)(1) and (2).
Petitioners assert that they are not liable for the section 6662
penalty because for all of the years at issue their returns were
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