Mahendra K. Tandon - Page 31

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               Petitioner argues that he provided all of his records to the           
          IRS during his audit, fully cooperated with the IRS, and did not            
          disregard any rules or regulations.  Petitioner's alleged                   
          cooperation and conclusory statement do not prove that he was not           
          negligent.  As we stated above, petitioner failed to maintain               
          adequate records of his income and expenses.  We conclude that              
          petitioner is liable for the additions to tax for negligence for            
          1986, 1987, and 1988 as determined by respondent to the extent of           
          any underpayment decided for those years that was not due to                
          Addition to Tax for a Substantial Understatement                            
               Respondent determined that petitioner is liable for                    
          additions to tax for substantial understatements for 1985, 1986,            
          1987, and 1988 pursuant to section 6661.  An understatement is              
          the difference between the amount required to be shown on the               
          return and the amount actually shown on the return and is                   
          substantial if it exceeds the greater of (1) 10 percent of the              
          tax required to be shown on the return for a taxable year, or (2)           
          $5,000.  Sec. 6661(b)(1) and (2)(A).  The understatement is                 
          reduced to the extent that the taxpayer has (1) adequately                  
          disclosed his or her position or (2) has substantial authority              
          for the tax treatment of an item.  Sec. 6661; sec. 1.6661-6(a),             
          Income Tax Regs.  Petitioner has the burden of proving he is not            
          liable for the addition to tax.  Rule 142(a).                               

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