- 35 -
also claimed a depreciation deduction for their lawn mower and a
sprinkler which had no apparent business purpose, for an
answering machine when they did not have a business telephone
line (they now concede that the answering machine was not
depreciable), and for 100 percent of a shed which they now
concede was only 25 percent depreciable during 1991 and 50
percent depreciable during 1992. Petitioners have also conceded
some deductions they claimed because they were either improper or
unsubstantiated. Therefore, we hold that they are liable for the
negligence penalty for the above items.
We conclude, however, that petitioners made a reasonable
attempt to comply with the Code provisions with respect to their
model railroad activity, and therefore are not liable for a
penalty on that portion of the underpayment for 1990, 1991 or
1992. Sec. 6664(c)(1).
In reaching all of our conclusions herein, we have
considered all arguments made by petitioners and, to the extent
not discussed above, find them to be without merit.
To reflect conceded and settled issues and our conclusions
with respect to the disputed issues,
Decision will be entered
under Rule 155.
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