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Petitioners were not entitled to deduct rental expenses in
the amounts of $8,417, $9,473, and $15,158, for their 1991, 1992,
and 1993 taxable years because they had no records to
substantiate these expenses.
OPINION
I. Addition to Tax Under Section 6651(a)(1)
Respondent determined that petitioners were liable for the
additions to tax under section 6651(a)(1) for the 1991, 1992, and
1993 taxable years. Section 6651(a)(1) imposes an addition to
tax for failing to file a timely income tax return, unless such
failure to file is due to reasonable cause and not due to willful
neglect. The addition to tax is 5 percent of the amount required
to be reported on the return for each month or fraction thereof
during which such failure to file continues, but not to exceed 25
percent in the aggregate. See sec. 6651(a)(1). As calendar year
taxpayers, petitioners' 1991, 1992, and 1993 returns were due on
April 15, 1992, 1993, and 1994, respectively. See sec. 6072(a).
However, in this case, petitioners filed their 1991 return on
January 8, 1993, and their 1992 and 1993 returns on May 11, 1994.
Unless petitioners can show that their failure to timely file
their returns was due to reasonable cause and not due to willful
neglect, respondent's determination will be sustained.
The term "reasonable cause" as set forth in section
6651(a)(1) has been defined as the exercise of ordinary business
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