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corroborated much of petitioner's testimony. We find that
petitioner did not reside in the loft.
The loft was constructed in order to provide more office
space after Donald Archer became the production manager and to
provide an appropriate place for petitioner to meet with the
corporation's customers. Petitioner did not use the loft as a
residence. The loft was constructed and used for valid corporate
business purposes. Therefore, we hold that petitioner did not
receive a constructive dividend in 1991 as a result of the
corporation's construction of the loft.
3. Whether Petitioner Is Liable for the Accuracy-related
Penalty Under Section 6662(a) for 1990 and 1991.
Respondent determined that petitioner is liable for the
accuracy-related penalty under section 6662(a) for 1990 and 1991.
Taxpayers are liable for a penalty equal to 20 percent of the
part of the underpayment to which section 6662 applies. Sec.
6662(a).
With respect to the 1990 taxable year, petitioner failed to
report part of the gain on the sale of the Castro Valley house.
He introduced no evidence disputing the accuracy-related penalty
and failed to argue during trial or on brief as to why the
penalty should not be applied to the understatement for that
year. Accordingly, we sustain respondent's determination that
petitioner is liable for the section 6662(a) accuracy-related
penalty for 1990.
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