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Petitioners also concede that they erroneously deducted
self-employment tax. The regulations provide that negligence is
shown when “A taxpayer fails to make a reasonable attempt to
ascertain the correctness of a deduction * * * on a return which
would seem to a reasonable and prudent person to be ‘too good to
be true’ under the circumstances”. See sec. 1.6662-3(b)(1)(ii),
Income Tax Regs. In these circumstances, petitioners did not
report any self-employment tax on their return, nor did they
attach the requisite schedule for such tax.
Petitioners have not provided a foundation or predicate for
claiming a self-employment tax deduction. It was not reasonable
for them to claim a deduction for self-employment tax.
Accordingly, petitioners are liable for the section 6662
accuracy-related penalty with respect to the amount of the
understatement of income tax attributable to the self-employment
tax deduction.
We have considered all of petitioners’ arguments, and to the
extent that they are not mentioned herein, we find them to be
moot or without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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