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The issues for decision are:
1. Whether petitioners correctly reported gross receipts
from their grocery store business for 1995, 1996, and 1997. We
hold that they did.
2. Whether petitioners are liable for the accuracy-related
penalty for negligence for 1995, 1996, and 1997. We hold that
they are not.
Section references are to the Internal Revenue Code in effect
for the years in issue. References to petitioner are to Tan Dang.
FINDINGS OF FACT
Some of the facts are stipulated and are so found.
A. Petitioners
Petitioners are husband and wife who resided in California
when they filed the petition.
B. Manwah Supermarket
During the years in issue, petitioners owned and operated a
4,000-square-foot grocery store in downtown Los Angeles,
California, known as L.A. Manwah Supermarket (Manwah). Manwah was
a sole proprietorship in 1995 and a partnership in 1996 and 1997.
Petitioners sold meat, poultry, fruits, vegetables, canned
goods, and dry goods at Manwah. Canned and dry goods were about
25 percent of Manwah’s sales, and meat, poultry, and produce were
about 75 percent. Typically, the work at Manwah was performed by
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