- 30 -
and taking into account the analyses of both experts, we find
that the useful life of the subject client list in
petitioner's business is 7 years.
Accuracy-Related Penalties
Respondent determined that petitioners are liable for
the accuracy-related penalty under section 6662(a) for 1989
in the amount of $2,239 and that petitioner is liable for
the penalty for 1990 in the amount of $2,718. Respondent
determined that the underpayment of tax for both years was
due to negligence or disregard of rules or regulations, a
substantial understatement of income tax, or "a substantial
valuation overstatement." Petitioners bear the burden of
proving that respondent's determination is wrong and that
they are not liable for the accuracy-related penalty. Rule
142(a); Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).
Petitioners make the following argument that the
penalty should not apply:
Clearly, Welch relied upon his own
expertise as well as the expertise of the
[seller's] attorney, [who was] experienced
income tax matters [and] who prepared the
Agreement. (Tr. 26) And, in view of the
authorities described herein it is clear that
there is substantial authority for the position
taken with respect to reporting deductions for
the amounts paid by Welch under the Agreement
and therefore [there was] no substantial under-
statement (Section 6662(d)(2)(B)) and clearly no
negligence or disregard of rules and regulations.
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