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1993-528; sec. 1.6664-4(b)(1), Income Tax Regs. The most
important factor is the taxpayer's effort to assess his proper
tax liability. Stubblefield v. Commissioner, T.C. Memo. 1996-
537; sec. 1.6664-4(b)(1), Income Tax Regs.
Taxpayers are required to keep records sufficient to
establish the amount of deductions or other matters required to
be shown on their returns. Sec. 6001; sec. 1.6001-1(a), Income
Tax Regs. Failure to maintain adequate records may constitute
negligence. Schroeder v. Commissioner, 40 T.C. 30, 34 (1963).
The record here shows that Mr. Palomo is a highly educated
individual. The Court finds it unreasonable that petitioner, an
attorney, would base his analysis of taxable income on knowledge
from a class he took 20 years earlier in law school rather than
from appropriate legal research. Petitioner testified that he
failed to even make the minimal effort of consulting the IRS
information booklet that accompanied his Federal income tax
return. The Court finds that his explanations do not demonstrate
an honest misunderstanding of fact or law that is reasonable in
light of his experience, knowledge, and education.
The Court concludes that petitioners failed to keep adequate
records. The Court also finds that petitioners failed to make a
reasonable attempt to determine whether they were entitled to
take medical expense deductions for Mr. Potter and Susan and
whether they were allowed to omit the Smith income from their
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