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itself, a basis for sustaining the accuracy-related penalty.
In this regard, we observe that a taxpayer is required to
maintain records sufficient to establish all items of income,
deduction, and credit that are required to be shown on the
taxpayer’s tax return. See sec. 6001; sec. 1.6001-1(a), Income
Tax Regs.; see also Lysek v. Commissioner, 583 F.2d 1088, 1094
(9th Cir. 1978), affg. T.C. Memo. 1975-293; Crocker v.
Commissioner, 92 T.C. 899, 916 (1989); Schroeder v.
Commissioner, 40 T.C. 30, 34 (1963); sec. 1.6662-3(b)(1),
Income Tax Regs. Additionally, failure to keep adequate
records is evidence of intentional disregard of the
regulations. See Crocker v. Commissioner, supra at 917.
In the present case, petitioner failed to report over
$29,000 of gross income from her proprietorship in 1995.
Moreover, for both 1995 and 1996, petitioner claimed NOL
deductions and various Schedule C deductions for which she did
not maintain substantiation required by law.
Based on the foregoing, and insofar as 1996 is concerned,
respondent has satisfied his burden of production under section
7491(c). Insofar as 1995 and 1996 are concerned, petitioner
has failed to establish that she acted reasonably with respect
to the underpayment of her taxes for those years. We therefore
sustain respondent’s determination and hold that petitioner is
liable for the accuracy-related penalties for 1995 and 1996.
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