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petitioners a deduction for the amounts shown on their 1994 and
1996 returns, without definitive evidence showing the amounts
expended and the purposes of the expenditures, would be “unguided
largesse”. See Jacoby v. Commissioner, supra.
Since petitioners failed to identify their deductions and
the specific amounts, the knowledge of which is unique to them,
we uphold respondent’s determination that petitioners are not
entitled to claim deductions in excess of those amounts
determined in the notice of deficiency.
C. Accuracy-Related Penalties
Respondent determined penalties pursuant to section 6662 in
the amounts of $2,346, $3,354, and $126,858 for the taxable years
1994, 1995, and 1996, respectively. Respondent based his
determination on negligence or disregard of the tax rules and
regulations and/or a substantial understatement of income tax.
Respondent’s determination is presumed correct, and the burden
lies with petitioners to demonstrate that respondent’s penalty
determination was in error.25 Rule 142(a).
Section 6662(a) imposes a 20-percent penalty on the portion
of an underpayment of tax attributable to, inter alia, negligence
and/or a substantial understatement of income tax. Sec. 6662(a)
and (b). “Underpayment” is defined as the amount by which the
tax imposed exceeds the excess of the sum of the amount shown by
25See supra note 13.
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