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forward with sufficient evidence indicating that it is
appropriate to impose” the accuracy-related penalty. Id.
Respondent contends that he has met that burden. The record
reveals that petitioners have failed to comply with the
requirements of the Internal Revenue Code, including their
failure to maintain adequate books and records and/or to
substantiate the claimed business deductions.
A taxpayer may avoid the accuracy-related penalty by showing
that (1) there was reasonable cause for the underpayment, and (2)
he acted in good faith with respect to such underpayment. Sec.
6664(c)(1). Whether a taxpayer acted with reasonable cause and
in good faith is determined by the relevant facts and
circumstances, and most importantly, the extent to which he
attempted to assess his proper tax liability. Sec. 1.6664-
4(b)(1), Income Tax Regs.
Petitioners have offered no evidence to show that they kept
adequate books or can substantiate their claimed deductions.
Moreover, petitioners have not shown that there was reasonable
cause for the underreporting of their 1999 tax liability.
Accordingly, petitioners are liable for the section 6662(a)
accuracy-related penalty.
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011