Robert J. & Shari L. Hartz - Page 17




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          important factor is the extent of the taxpayer’s effort to assess           
          his proper tax liability for the year.  Id.                                 
               Petitioners made a substantial understatement of tax on                
          their 1996 return.  They have failed to produce books and records           
          or to otherwise show the method used to arrive at the amounts of            
          the deductions and income which were reported.  Based on the                
          record before us, we find petitioners have not established that             
          they had substantial authority or a reasonable basis for the                
          items in question.  Nor have they established that there was                
          reasonable cause for the underpayment or that they acted in good            
          faith with respect to the underpayment.  Consequently, we sustain           
          respondent’s determination that petitioners are liable for the              
          section 6662(a) accuracy-related penalty for 1996.                          
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   
               To reflect the foregoing,                                              
                                             Decisions will be entered                
                                        for respondent in docket No.                  
                                        2730-01S and under Rule 155 in                
                                        docket No. 2731-01S.                          













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