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With respect to the unreimbursed employee expenses,
petitioner incurred expenses in the use of his personal vehicle
in making deliveries for his employer. However, he maintained no
logs to document the use of his vehicle, nor did not retain any
receipts or any other documentary information to substantiate any
amount paid or incurred for such expenses. Such expenses are
subject to the strict substantiation requirements of section
274(d), either through an account book, diary, statement of
expense, or similar record. Sec. 1.274-5T(c)(2)(i), Temporary
Income Tax Regs., 50 Fed Reg. 46017 (Nov.6, 1985). The Court,
therefore, sustains respondent in disallowing the unreimbursed
employee expense deductions for the 2 years in question. The tax
preparation fees, although deductible and allowed, are deductible
only to the extent such expenses exceed 2 percent of adjusted
gross income. Sec. 67(a). Whether petitioners realize any tax
benefit from this allowance will be determined in the Rule 155
computation.
Petitioners contend they should be absolved of liability for
the section 6662(a) penalties because they relied on the
representations of their return preparer.
Section 6662(a) provides for an accuracy-related penalty
equal to 20 percent of any portion of an underpayment of tax
required to be shown on the return that is attributable to the
taxpayer's negligence or disregard of rules or regulations. Sec.
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