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on a tax liability of $56,423, or a 29.6-percent understatement,
and (3) for 1999, respondent calculated an understatement of
$16,649 on a tax liability of $62,381, or a 26.7-percent
understatement. Therefore, from the notice of deficiency, it is
clear that petitioner’s understatement of tax for each year is a
substantial understatement under section 6662(d)(1)(A), and
respondent has satisfied his burden of production. These
computations are consistent with our disallowance of petitioner’s
claimed deductions for losses in excess of his revenue from his
horse activity.
Petitioner did not present convincing evidence that his
underpayments of tax resulted in spite of his acting with
reasonable cause and good faith. He argued only that he had been
claiming the disallowed deductions for many years without adverse
results. Under these circumstances, we sustain respondent’s
determination of accuracy-related penalties under section
6662(a).
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.
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