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B. Accuracy-Related Penalty Under Section 6662
Respondent determined and contends that petitioners are
liable for the accuracy-related penalty for negligence under
section 6662(a) and (c) for 1994.
Section 6662(a) and (b)(1) imposes a 20-percent penalty on
the portion of an underpayment attributable to negligence.
Negligence includes a failure to make a reasonable attempt to
comply with the Internal Revenue Code or to exercise ordinary and
reasonable care in that respect. See sec. 6662(c). Petitioners
bear the burden of proving that they are not liable for the
accuracy-related penalty imposed by section 6662(a). See Rule
142(a).
Petitioners contend that their underpayment was not due to
negligence or intentional and willful disregard of rules or
regulations because they have consistently used the same method
of accounting for more than 40 years. They also contend that
respondent conceded this addition to tax. Petitioners provided a
copy of an unsigned decision document that appears to have been
prepared by respondent which states that petitioners are not
liable under section 6662(a) for 1994. We do not consider that
document because it is not in evidence.
We believe that petitioners were negligent. Petitioners
improperly mixed cash and accrual methods of accounting. They
understated gross receipts on their Schedule C by $139,993 and
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