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maintain any other log on the use of the airplane. We find that
petitioner's reconstruction of the destroyed records is not
reasonable or adequate in the circumstances to come within the
lost records exception of the regulations. With respect to the
Mercedes automobile, the Court rejects petitioner's contention
that a log was not necessary for that vehicle because it was used
exclusively in his business. As noted earlier, a
contemporaneously prepared log for that vehicle would have
disproved any personal use of the vehicle and, most importantly,
would have established the business purposes for which the car
was being used. The Court, therefore, sustains respondent on all
of the expenses at issue.
Respondent determined that petitioners were liable for the
penalty under section 6662(a) for a substantial understatement of
tax under section 6662(b)(2). Section 6662(a) provides that, if
it is applicable to any portion of an underpayment in taxes,
there shall be added to the tax an amount equal to 20 percent of
the portion of the underpayment to which section 6662 applies.
There is a substantial understatement of tax if the amount of the
understatement exceeds the greater of (1) 10 percent of the tax
required to be shown on the return, or (2) $5,000. Sec.
6662(d)(1)(A). For purposes of section 6662(d)(1),
"understatement" is defined as the excess of tax required to be
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