- 17 - maintain documents showing that the claimed expenses were incurred or paid. Petitioners rely on Rev. Proc. 98-25, 1998-1 C.B. 689, which provides for the use of “machine sensible records” like Quicken to satisfy their record keeping requirements. Petitioners’ understanding was that the revenue procedure permitted computer records in lieu of other records that are required to be maintained under section 6001. Under Rev. Proc. 98-25, section 11, 1998-1 C.B. at 693, however, taxpayers are not relieved from the responsibility of retaining the hardcopy records from which the computer records were derived; i.e., bills, invoices, etc. received in the ordinary course of business. In that regard, petitioners professed to have only the Quicken printouts. Accordingly, petitioners have failed to show that they are entitled to home office deductions claimed on their Schedule C for 1997 or 1998 in excess of the amounts that respondent has conceded they would be entitled to as Schedule A deductions. F. Petitioners’ Liability for Section 6662 Penalties Respondent determined that petitioners were liable for penalties under section 6662(a) and (h). Respondent has conceded that petitioners are not liable for a penalty under section 6662(h) but continues to maintain that petitioners are liable for a penalty under section 6662(a) for negligence because they failed to maintain adequate records.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011