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Deductions are a matter of legislative grace. See New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers
bear the burden of establishing that they are entitled to the
claimed deductions. See Rule 142(a); Welch v. Helvering, 290 U.S.
111, 114 (1933). This includes the burden of substantiating the
amount and purpose of the item claimed. See sec. 6001; Hradesky v.
Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821
(5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs.
Petitioners failed to substantiate the amount or business
purpose of the automobile expenses. The only evidence presented
was a list of automobile expenses prepared by petitioners' counsel
on the basis of petitioner's memory and not prepared
contemporaneously with the use of the automobile. Accordingly, we
sustain respondent on this issue.
Issue 3. Section 6662(a) Accuracy-Related Penalty
The final issue is whether petitioners are liable for the
section 6662(a) accuracy-related penalties for the years in issue
for negligence or disregard of rules or regulations or substantial
understatement of tax. Petitioners generally assert a reasonable
cause defense.
Section 6662 imposes a penalty equal to 20 percent of the
amount of the underpayment attributable to negligence or disregard
of rules or regulations or substantial understatement of tax.
"Negligence" means any failure to make a reasonable attempt to
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