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was reasonable cause and with respect to which the taxpayer acted
in good faith. Sec. 6664(c). Petitioners bear the burden of
showing that they were not negligent. Rule 142(a); Bixby v.
Commissioner, 58 T.C. 757, 791-792 (1972).
Petitioners have stated that they did not intentionally omit
interest income and State tax refunds. Petitioners, however, did
omit interest income in 2 different years and also conceded that
respondent correctly disallowed all of the medical expense
deductions claimed for each of the 3 years. More significantly,
petitioners were substantially without supporting documentation
for most of the items claimed on Schedules A and F of each of
their 1992 and 1993 income tax returns. In addition, the manner
in which petitioner estimated the amount deductible reflected a
huge exaggeration. Under these circumstances, we cannot find
that petitioners acted with reasonable cause or in good faith.
Accordingly, petitioners are liable for the accuracy-related
penalty attributable to negligence for the entire underpayment
for the taxable years 1992 and 1993.
To reflect the foregoing and considering concessions of the
parties,
Decisions will be entered
under Rule 155.
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Last modified: May 25, 2011