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able to substantiate only a portion of the deductions that they
claimed on Schedule C. Petitioners did not provide any
explanation as to why they were unable to substantiate all of the
legal fees that they claimed as deductions. Thus, with respect
to the substantiation item, we find that petitioners have failed
to show that their actions were reasonable and not made with
intentional disregard of rules or regulations. Under these
circumstances, we hold that petitioners are liable for the
accuracy-related penalty under section 6662(a) on the portion of
any underpayment attributable to the deduction of legal fees that
were not substantiated.
We have considered all other arguments of the parties, and
to the extent not addressed herein we find them to be either
moot, meritless, or irrelevant.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011