R. George and Penney Gregersen - Page 7




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          items of income, loss, deduction, or credit.  See sec. 1366(a).                
          Petitioners presented no credible evidence relating to this                    
          issue.  Accordingly, we sustain respondent’s adjustment of                     
          petitioners’ 1994 income.                                                      
          IV. Accuracy-Related Penalty                                                   
               Respondent determined that petitioners were negligent in                  
          determining their 1994 tax liability and are liable for a section              
          6662 penalty.  The penalty applies to the portion of petitioners’              
          underpayment that is attributable to negligence or disregard of                
          rules or regulations.  Sec. 6662(b)(1).  Petitioners did not make              
          a reasonable attempt to report accurately some of their                        
          deductions.  As a result, petitioners are liable for the                       
          accuracy-related penalty.                                                      
               Contentions we have not addressed are moot, irrelevant, or                
          meritless.                                                                     
               To reflect the foregoing,                                                 

                                                    Decision will be entered             
                                               under Rule 155.                           
















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