Scott C. and Patricia A. Simpson - Page 9

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          businesses.  Accordingly, we hold that petitioners are not                  
          entitled to deduct the expenses as ordinary and necessary                   
          business expenses.                                                          
          II.  Accuracy-Related Penalty for Negligence                                
               Section 6662(a) imposes a penalty in an amount equal to 20             
          percent of the portion of any underpayment to which the section             
          applies.  The section applies to, among other items, the portion            
          of an underpayment attributable to negligence or disregard of the           
          rules or regulations.  Sec. 6662(b)(1).  Petitioners did not at             
          trial or in their brief dispute their liability for the accuracy-           
          related penalty for negligence.  As a result, petitioners have              
          failed to carry their burden of proof and are liable for the                
          penalty.                                                                    
               We have considered the other arguments made by the parties             
          and found them to be either irrelevant or without merit.                    
               To reflect concessions by the parties,                                 


                                                  Decision will be entered            
                                             under Rule 155.                          














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