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B. The Amount of Petitioner’s Cash Hoard
We find that petitioner saved $7,000 from 1966 to 1971. For
reasons discussed above at paragraph A-4, we believe that
petitioner saved substantially less than the amounts he claimed
from his International Paper wages, the sale of his personal
possessions, and his buying and selling activity. Thus, we find
that he saved about one-fourth of his International Paper wages
($24,500), $2,000 from selling his personal possessions in 1985,
and about one-fourth of his total adjusted gross income from 1989
to 1997 ($6,500) from his buying and selling activity. Upon due
consideration of the findings of the District Court, we conclude
that petitioner had a cash hoard of $40,000 ($7,000 + $24,500 +
$2,000 + $6,500) on December 31, 1996, and that petitioners had
unreported taxable income of $109,200 in 1997 from petitioner’s
participation in the fencing operation.
C. Whether Petitioners Are Liable for the Accuracy-Related
Penalty
Respondent contends that petitioners are liable for the
accuracy-related penalty for negligence and substantial
understatement under section 6662(a) for 1997.
Taxpayers are liable for a penalty equal to 20 percent of
the part of the underpayment attributable to negligence or
disregard of rules or regulations or to a substantial
understatement of income tax. See sec. 6662(a) and (b)(1) and
(2). Negligence includes failure to make a reasonable attempt to
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