- 30 -30
not excuse the failure to report income from the
grocery/convenience store business or any other item. See Kenroy,
Inc. v. Commissioner, T.C. Memo. 1984-232. The failure to keep
adequate records, in contravention of section 6001, supports the
imposition of the negligence addition to tax and the accuracy-
related penalty. See Maguire v. Commissioner, T.C. Memo. 1996-145;
Tabbi v. Commissioner, T.C. Memo. 1995-463; Simonelli v.
Commissioner, T.C. Memo. 1985-12.
Finally, petitioners made no efforts to obtain professional
advice to determine the tax consequences of the check-kiting scheme
before filing their tax returns. They never asked either their
accountant or a tax attorney about how to report those activities.
Given their lack of knowledge of the tax law, petitioners should
have sought advice about the tax implications of the check-kiting
scheme. Cf. Krause v. Commissioner, T.C. Memo. 1991-13.
Thus, for 1988, we hold that petitioners are liable for
additions to tax for negligence or disregard of rules or
regulations pursuant to section 6653(a)(1), substantial
understatement of tax pursuant to section 6661(a)(1), and failure
to timely file their return. For 1989 and 1990, we hold that
petitioners are liable for the accuracy-related penalties for
negligence or disregard of rules or regulations pursuant to section
6662.
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