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$9,286 and $162, respectively. Respondent also determined an
addition to tax for a substantial understatement of tax under
section 6661(a) of $2,322 for 1982.
The issues for decision are: (1) Whether petitioners are
liable for the additions to tax for negligence or intentional
disregard of rules or regulations pursuant to section 6653(a)(1)
and (2) for both years; and (2) whether petitioners are liable
for the addition to tax for a substantial understatement of tax
under section 6661(a) for 1982.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Dana Point, California, at the time they filed their petition.
During the years at issue, James L. Downs (petitioner) was a
corporate officer and major shareholder of Carburetor Sales and
Services, Inc., and Eva J. Downs was employed as a teacher.
Petitioner received a degree in business education in the 1970's.
Petitioners had been active in the stock market for a number of
years, and they also invested in several real estate limited
partnerships through a broker.
In 1982, petitioner attended a lecture given by Consolidated
Financial Services, Inc. (CFS), at the University of Southern
California (USC). Petitioners’ son was a student at USC, and he
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