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At trial, petitioners recognized that their disallowed itemized
deductions were false and could not be sustained. They conceded
those adjustments. Petitioners knew that they could deduct only
amounts that they had actually paid. They made no attempt to
determine the qualifications of their return preparer and,
moreover, did not seek other professional advice to satisfy the
accuracy of their returns. Petitioners cited no legal authority
to the Court that, under similar facts, would exonerate them from
the penalties under section 6662(a). Prior to Mr. Beltran's
preparation of petitioners' returns, petitioners prepared drafts
of their returns, which they presented to Mr. Beltran. On these
drafts, petitioners did not claim itemized deductions. Mr.
Beltran's arrangement with petitioners was that his tax
preparation fees would be 10 percent of the refunds calculated on
the returns prepared by him to the extent such refunds exceeded
the refunds calculated by petitioners on the drafts of their
returns. Mr. Beltran represented to petitioners that records
were not necessary to substantiate deductions, and they were
entitled to deductions based on a percentage of their income. He
further advised petitioners not to respond to inquiries of
respondent with regard to their returns, including respondent's
counsel in preparation of this case for trial. Petitioners
adhered to that advice and only in the few days before trial did
they submit one document that was grossly inadequate to
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