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penalty based on a determination that the entire amount of the
deficiency is due to petitioners’ negligence.
A. Amounts of Deficiency
The 1993 deficiency that respondent determined is due
entirely to application of the bank deposits method. Supra table
2, especially notes 6 and 7. Our comments and conclusions in the
course of our analysis of the bank deposits method in Part II.
C., supra, apply equally to 1993.
We hold that, except as to respondent’s concessions and our
comments in supra table 2, notes 6 and 7, petitioners have failed
to show that respondent’s determination of omitted income was
excessive.
B. Negligence
Respondent determined that petitioners are liable for a 20-
percent negligence addition to tax on the entire underpayment for
1993. Respondent contends petitioners’ failure to maintain and
furnish adequate records of their 1993 income-producing
activities “thwarted respondent’s attempt to examine petitioners’
tax liability for that year.” Petitioners maintain that section
6662 does not apply because reasonable cause excuses their
failure to report all of their taxable income for 1993.
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