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portion of the deficiency." Petitioners presented no evidence
showing that the underpayment for 1987 that is attributable to
those expenses is not due to fraud. On the record before us, we
find that petitioners have failed to show, as they must under
section 6653(b)(2), that the portion of the underpayment for 1987
that is attributable to the deductions which respondent disal-
lowed is not due to fraud.
Based on our review of the entire record before us, we find
that petitioners are liable for 1987 for the additions to tax
under section 6653(b)(1) with respect to the portion of the
underpayment for that year that respondent determined is attrib-
utable to fraud.
Petitioners' Taxable Years 1986 and 1988
Respondent contends that $117,000 of the underpayment for
1986 (1986 underpayment) and all of the underpayment for 1988
that were determined in the notice are attributable to fraud. We
have found a revised 1988 underpayment, and our discussion
addresses the parties' contentions regarding respondent's deter-
minations under section 6653(b)(1) with respect to the 1986
underpayment and the revised 1988 underpayment.
Petitioners contend that the 1986 underpayment and the
revised 1988 underpayment are not due to fraud, but are due to
errors in petitioners' returns for 1986 and 1988 that were made
by their accountant Mr. Dennett on whom they relied and to whom
they provided complete written materials from which he could have
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