- 10 - We sustain respondent’s disallowance of each of the deductions at issue.5 Accuracy-Related Penalties Respondent determined that petitioners are liable for accuracy-related penalties under section 6662(a) for both years in issue with respect to the underpayments resulting from the total amounts of the deficiencies. Respondent has the burden of production with respect to the penalties but the burden of proof remains on petitioners. Sec. 7491(c); Higbee v. Commissioner, 116 T.C. 438 (2001). Section 6662(a) imposes a 20-percent penalty on the portion of an underpayment attributable to any one of various factors, one of which is negligence or disregard of rules or regulations. Sec. 6662(b)(1). “Negligence” includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code, including any failure to keep adequate books and records or to substantiate items properly. Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. Section 6664(c)(1) provides that the penalty under section 6662(a) shall not apply to any portion of an underpayment if it is shown that there was 5The rent expense claimed by petitioners as both employee business expense and Schedule C business expense was connected to petitioner’s use of his own residence. Although petitioners do not directly address the “home office” provisions of sec. 280A we note that petitioners have not shown that any portion of their residence was “exclusively used on a regular basis” for business purposes. Sec. 280A(c)(1).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011