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Section 6001 and section 1.6001-1(a) and (e), Income Tax
Regs., require taxpayers to keep such permanent books of account
or records as are sufficient to establish the amount of gross
income, deductions, credits or other matters required to be shown
on their tax returns. The books and records that petitioner
maintained for its fiscal 1990 were so inconsistent with each
other as to be inadequate to establish petitioner’s diesel fuel
gross receipts and cost of goods sold, which are required to be
reported on petitioner’s income tax return. There is no evidence
in the record that petitioner kept any meaningful books and
records as to automobile expenses and rent expenses.
Petitioner’s failure to keep adequate records under these
circumstances constitutes negligence. See Stovall v.
Commissioner, 762 F.2d 891, 895 (11th Cir. 1985), affg. T.C.
Memo. 1983-450; Zivnuska v. Commissioner, 33 T.C. 226, 239-241
(1959). This negligence resulted in the entire deficiency for
petitioner’s fiscal 1990. In the instant case, petitioner’s
underpayment, for purposes of section 6662, is the same as
petitioner’s deficiency. Accordingly, we conclude and we have
found that petitioner has an underpayment for its fiscal 1990 and
that all of this underpayment is due to negligence.
We hold for respondent on this issue.13
13Because of our determination as to the negligence, etc.,
penalty, it is not necessary for us to rule on respondent’s
(continued...)
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