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business activity in the years in issue. Petitioner has provided
no records to show that the expenses claimed were actually
incurred, as required by section 6001, although petitioner claims
to keep adequate records with regard to her activities. We
conclude that petitioners are not entitled to the claimed
expenses pursuant to section 162 and are thus not entitled to the
net losses claimed in the amounts of $29,913 and $19,393 for 1994
and 1995, respectively. Respondent is sustained on this issue.
4. Accuracy-Related Penalty Under Section 6662(a)
Respondent determined petitioners were liable for the
accuracy-related penalty under section 6662(a) for 1994 and 1995.
The accuracy-related penalty is equal to 20 percent of any
portion of an underpayment of tax required to be shown on the
return that is attributable to the taxpayer's negligence or
disregard of rules or regulations. See sec. 6662(a), (b)(1).
"Negligence" consists of any failure to make a reasonable attempt
to comply with the provisions of the Internal Revenue Code. Sec.
6662(c). "Disregard" consists of any careless, reckless, or
intentional disregard. Id.
An exception applies to the accuracy-related penalty when
the taxpayer demonstrates (1) there was reasonable cause for the
underpayment, and (2) he acted in good faith with respect to such
underpayment. Sec. 6664(c). Whether the taxpayer acted with
reasonable cause and in good faith is determined by the relevant
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