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We find that their testimony, the spreadsheet, and the daily work
logs were not credible. Petitioners were employees of Ashley,
Inc., where she worked full time and he worked 32 hours a week.
In addition to his employment at Ashley, Inc., petitioner also
operated a horse racing business. Petitioners testified, and the
spreadsheet indicates, that they spent a fair amount of time
rendering personal services for their own residence and for the
properties owned by petitioner’s parents. Even if we were to
accept as true petitioner’s testimony that he worked 12 hours per
day at the Sanibel property (above and beyond his time fishing
off the pier), petitioners spent no more than 2 weeks per year
there. While petitioners have spent some time performing
personal services at their rental properties, we conclude that
such time falls short of the “more than 750 hours of services”
required under section 469(c)(7). Accordingly, we sustain
respondent’s determination regarding this issue.
The final issue is whether petitioners are liable for
accuracy-related penalties under section 6662(a) for the 1999 and
2000 taxable years. An accuracy-related penalty “applies to any
portion of an underpayment of tax required to be shown on a
return” where such portion is attributable to negligence or
disregard of rules or regulations. Sec. 6662(a) and (b)(1). The
term “negligence” includes any failure to make a reasonable
attempt to comply with the provisions of the Internal Revenue
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