James R. and Myrtice L. Peacock - Page 30

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          Commissioner, 52 T.C. 147, 151 (1969).  To qualify for a bad debt           
          deduction, a taxpayer must show that “some event occurred during            
          the year in which the deduction is sought that rendered the debt            
          uncollectible.”  Greenberg v. Commissioner, T.C. Memo. 1992-292.            
               The law and the facts do not support petitioners’ claim to             
          this bad debt deduction.  Among other things, petitioners have              
          not proven:  (1) That the amount of the loan was uncollectible              
          from the acquaintance or (2) that the equity in the condominium             
          which Mr. Peacock received did not exceed the loan balance.  We             
          sustain respondent’s denial of this deduction.                              
          3.  Accuracy-Related Penalties and Addition to Tax                          
               Respondent determined that petitioners are liable for                  
          accuracy-related penalties under section 6662(a) for, among other           
          things, negligence and intentional disregard of rules or                    
          regulations.  Petitioners argue that they reasonably believed               
          that the fishing activity was a business and that they reasonably           
          relied upon their tax return as prepared by their accountant.               
               Section 6662(a) and (b)(1) imposes a 20-percent                        
          accuracy-related penalty on the portion of an underpayment that             
          is due to negligence or intentional disregard of rules or                   
          regulations.  Negligence includes a failure to attempt reasonably           
          to comply with the Code.  Sec. 6662(c).  Disregard includes a               
          careless, reckless, or intentional disregard.  Id.  An                      
          underpayment is not attributable to negligence or disregard to              

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