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sustained on the section 6662(a) penalty with respect to these
two items.
Respondent did not determine that the section 6662(a)
penalty was applicable to petitioner's Schedule C disallowed
expenses; however, as noted above, respondent determined that the
penalty was applicable to the payments petitioner received from
Metropolitan Life Insurance Co. With respect to this adjustment,
the Court notes that the payor, Metropolitan Life Insurance Co.,
withheld $119 in taxes on the taxable portion of the
distribution. On petitioner's income tax return, on page 2 of
Form 1040, line 52, Federal income tax withheld from Forms W-2
and 1099, petitioner claimed a credit of $3,779 for prepaid
taxes. However, on the Information Returns Master File
Transcript that respondent offered into evidence, the transcript
reveals that petitioner's prepayments of tax through withholdings
totaled $3,895. The difference between the transcript amount and
the amount petitioner claimed as a prepayment credit on his
return is $116. Since both the tax return and the transcript
used rounded numbers, it is evident to the Court that, while
petitioner and his wife failed to report the Metropolitan Life
Insurance Co. income, they likewise failed to claim as a credit
the taxes that had been withheld by Metropolitan Life Insurance
Co. on the distributions made to petitioner. Therefore, the
Court is not convinced that petitioner negligently or
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