Franklin D. and Sandra M. Terrell - Page 4

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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.                                                
          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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