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frivolous tax-protester arguments. Petitioners are not entitled
to deductions for business expenses that are completely
unsubstantiated. Ronnen v. Commissioner, 90 T.C. 74, 102 (1988).
Petitioners have failed to meet their burden of proof with
respect to the amounts reported on the Schedules C that were
disallowed in the notice of deficiency. Thus, petitioners are
not entitled to any amounts claimed for returns and allowances,
cost of goods sold, or business expense deductions reported on
the Schedules C for the year at issue. Respondent is sustained
on this issue.
4. Section 6651(a)(1) Addition to Tax
Respondent determined an addition to tax as a result of
petitioners’ failure to timely file their Federal income tax
return for the year at issue. Section 6651(a)(1) imposes an
addition to tax for failure to file a timely tax return. The
addition to tax is equal to 5 percent of the amount of the tax
required to be shown on the return if the failure to file is not
for more than 1 month. Sec. 6651(a)(1). An additional 5 percent
is imposed for each month or fraction thereof in which the
failure to file continues, to a maximum of 25 percent of the tax.
Id. The addition to tax is imposed on the net amount due. Sec.
6651(b).
The addition to tax is applicable unless a taxpayer
establishes that the failure to file was due to reasonable cause
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