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business property in an attempt to evade paying income tax. Mr.
Bryan Kinney, owner of the garage apartment that petitioners
claimed as their personal residence, testified that petitioners
never lived in such apartment. In addition, when initially asked
by Ms. Page, respondent's auditing agent, petitioner wife refused
to answer the simple question of where she lived. Finally, both
petitioner wife's 1991 and 1992 Forms W-2 show her home address
as 1419 Zunis Avenue. These factors, among others, convince us
that petitioners did use such address as a personal residence.
Petitioners have presented no credible evidence refuting this
finding. We therefore sustain respondent's determination that
petitioners are liable for the fraud penalty for that portion of
the underpayment attributable to disallowed household-related
expenses which petitioners claimed as business deductions.
The fifth issue for decision is whether petitioners are
liable for the section 6662(a) accuracy-related penalty for
negligence. Respondent's determination of negligence is presumed
to be correct, and petitioners bear the burden of proving that
the penalty does not apply. Rule 142(a); Welch v. Helvering, 290
U.S. 111, 115 (1933); Bixby v. Commissioner, 58 T.C. 757, 791-792
(1972).
Section 6662(a) imposes a 20-percent penalty on the portion
of the underpayment attributable to any one of various factors,
one of which is negligence or disregard of rules or regulations.
Sec. 6662(b)(1). Respondent determined that petitioners are
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