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Respondent determined a deficiency of $8,116 in Federal
income tax and an accuracy-related penalty under section 6662(a)
in the amount of $1,623 for petitioners' 1992 tax year.
After a concession by petitioners, the issues for decision
are whether petitioners properly substantiated certain trade or
business expenses under section 274(d), and whether petitioners
are liable for the penalty under section 6662(a) for a
substantial understatement of tax under section 6662(b)(2).2
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners were
legal residents of Tulsa, Oklahoma.
During the year in question, Michael E. Hentges (petitioner)
was primarily engaged in the sale of insurance and securities
and, to some extent, engaged in estate planning and financial
consultation. He has been in such business since 1984. Many of
his clients were located in various States. Petitioner made
frequent business trips to contact and solicit new clients, and
virtually all of his travel was by private plane, which he
rented. For local transportation, petitioner owned a 1983
Mercedes automobile that he used exclusively in his business.
2 At trial, petitioners conceded an adjustment in the
notice of deficiency for their failure to report as income on
their 1992 return an IRA distribution of $6,220. Petitioners
also conceded the 10-percent additional tax under sec. 72(t) for
the early distribution of the IRA.
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