Robert C. and Diana J. Watts - Page 8




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          not rely on his business records does not mean that he                      
          negligently prepared petitioners’ 1994 and 1995 returns.  We                
          disagree.                                                                   
               Petitioners’ claim that they were not negligent because the            
          cancellation of indebtedness issue was technical is belied by the           
          fact that they received a Form 1099-C for 1994 reporting the                
          cancellation of indebtedness income, yet they did not report the            
          income or disclose on their 1994 return that they received the              
          Form 1099-C.  Similarly, petitioners cannot plead ignorance to              
          the requirements for claiming bad debts since they availed                  
          themselves of its benefits.  They did not consult an accountant.            
          Petitioners’ claim that they were not negligent because                     
          respondent’s bank deposits method is inaccurate misses the mark             
          since petitioners agreed to all of respondent’s adjustments to              
          gross income.                                                               
               Petitioners point out that the taxpayers in Tudyman v.                 
          Commissioner, T.C. Memo. 1996-215; Heasley v. Commissioner, 902             
          F.2d 380 (5th Cir. 1990), revg. T.C. Memo. 1988-408; and Streber            
          v. Commissioner, 138 F.3d 216 (5th Cir. 1998), revg. T.C. Memo.             
          1995-601, were found not liable for negligence.  We disagree that           
          these cases are analogous to the instant case.  In Tudyman, the             
          taxpayer made a reasonable attempt to estimate her loss from an             
          earthquake by relying on an appraiser’s estimates.  Here,                   
          petitioners did not rely on the advice of an accountant or other            






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