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reliance on him to perform Toraya's nondelegable duty to file
that return. United States v. Boyle, 469 U.S. at 245; Estate of
La Meres v. Commissioner, 98 T.C. at 318. Petitioners have not
satisfied their burden of proving that Toraya had reasonable
cause for not timely filing its 1988 return. Niedringhaus v.
Commissioner, 99 T.C. at 220-221; Baldwin v. Commissioner, 84
T.C. at 870. Accordingly, we sustain respondent's determination
of the addition to tax under section 6651(a) for 1988.
Sections 6653(a)(1) and 6662(a)
Respondent determined that Toraya is liable for an addition
to tax for negligence under section 6653(a)(1) for 1988 and
accuracy-related penalties for negligence under section 6662(a)
for 1989, 1990, and 1991. Petitioners contend that Toraya is not
liable for the addition to tax or accuracy-related penalties for
negligence, because it relied in good faith on Nakamura to
properly prepare its tax returns for the years in issue.
Respondent contends that petitioners failed to prove that Toraya
had reasonable cause for understating its income on its returns
for 1988 through 1991 and that the understatements are due to
negligence within the meaning of sections 6653(a)(1) and
6662(a)(1). We agree with respondent.
Toraya's failure to maintain and to produce reliable records
of its financial transactions and taxable income supports a
conclusion of negligence. Crocker v. Commissioner, 92 T.C. at
917; Schroeder v. Commissioner, 40 T.C. at 34. Moreover, Toraya
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