20
Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir. 1967),
affg. in part and remanding in part 43 T.C. 168 (1964); Neely v.
Commissioner, 85 T.C. 934, 937 (1985). Sands must establish that
the negligence additions to tax do not apply. Bixby v.
Commissioner, 58 T.C. 757, 791 (1972).
Sands' underpayments stem from her inability to
substantiate Lone Star's expenses. Failing to keep or produce
adequate books and records, as required by section 6001, may be
justification for imposing the negligence additions to tax.
Axelrod v. Commissioner, 56 T.C. 248, 258-259 (1971); Zafiratos
v. Commissioner, T.C. Memo. 1992-135, affd. without published
opinion 993 F.2d 880 (3d Cir. 1993). We find that Sands is not
liable for additions to tax for negligence for the taxable years
1984, 1985, or 1986. Sands played a minimal role in Lone Star's
activities. She relied on Murphy to manage Lone Star and to keep
adequate records to substantiate Lone Star's expenses. Sands had
no control over these matters. See Antonides v. Commissioner, 91
T.C. 686, 700 (1988), affd. 893 F.2d 656 (4th Cir. 1990).
3. Substantial Understatement Addition to Tax and Accuracy-
Related Penalty
Respondent determined an addition to tax under section 6661
against Sands for each of the taxable years 1984, 1985, and 1986.
Section 6661(a) imposes an addition to tax equal to 25 percent of
the amount of any underpayment attributable to a substantial
understatement of income tax. Pallottini v. Commissioner, 90
T.C. 498, 503 (1988). An understatement exists where the amount
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