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approach falls short of showing that respondent's bank deposit
and cost of goods calculations are in error. In addition,
petitioners have not shown that their approach would be more
reliable than respondent's or that it was, in fact, reliable
and/or verifiable.
Respondent also disallowed a total of $5,640 in claimed
expenses on petitioners' Schedule C and $20,879.00 of itemized
deductions on Schedule A of petitioners' 1993 income tax return.
As a result of disallowing the itemized deductions, respondent
allowed petitioners a $6,200 standard deduction. Petitioners
failed to substantiate the claimed expenses and itemized
deductions or to show respondent's determination to be in error
regarding these items. Accordingly, respondent's determination
is sustained as to the disallowed expenses and deductions.
Finally, respondent determined an accuracy-related
negligence penalty under section 6662(a) for petitioners' 1993
taxable year. Section 6662(a) and (b)(1) provides that if any
portion of an underpayment of tax is attributable to negligence
or disregard of rules or regulations, then there shall be added
to the tax an amount equal to 20 percent of the amount of the
underpayment which is so attributable. Respondent argues that
the entire deficiency should be subject to the 20-percent penalty
“because there was $324,851.00 of unreported gross receipts, no
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