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Sec. 1.274-5T(c)(3)(i), Temporary Income Tax Regs., 50 Fed. Reg.
46020 (Nov. 6, 1985). Automobile expense may be computed using
actual costs, such as depreciation, or using the standard mileage
method; thus, petitioners cannot deduct depreciation expense and
use the standard mileage rate. See Rev. Proc. 91-67, 1991-2 C.B.
887.
Petitioners have not produced evidence sufficient to
substantiate Mrs. Tesar's automobile expense as required by
section 274(d). The summary sheets prepared by petitioner do not
constitute adequate records. Petitioner did not prepare them at
or near the time of each use; moreover, petitioner did not have
knowledge of each element of Mrs. Tesar's automobile usage.
Mrs. Tesar was not present at trial and did not testify. The
only other evidence in the record is petitioner's testimony
concerning the manner in which he compiled the information on the
summary sheets for the purpose of preparing petitioners' tax
returns. There is no explanation in the record as to why
petitioners failed to present any records maintained by
Mrs. Tesar. Accordingly, respondent is sustained on this issue.
Respondent determined that petitioners are liable for an
accuracy-related penalty under section 6662(a) for 1992 and 1993
due to a substantial understatement of income tax.
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the portion of an underpayment of tax that is
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