- 9 -
or for a prior tax year. Gertz v. Commissioner, 64 T.C. 598, 600
(1975).3
Petitioners contend that they included $2,219 in income in
1999. We disagree. Petitioners reported on their 1999 return
that they received rent of $14,700 from the Crenshaw Blvd.
property in 1999; they did not report any other income related to
the Crenshaw Blvd. property on that return. We conclude that
petitioners may not deduct $2,219 as a bad debt for 1999.
G. Whether Petitioners Are Liable for the Accuracy-Related
Penalty
Respondent met the burden of production under section
7491(c) with respect to the accuracy-related penalty under
section 6662 because petitioners conceded that they are not
entitled to deduct certain charitable contributions, employee
business expenses, miscellaneous expenses, and Schedule C losses,
and they figured their tax liability for 1999 by computing
depreciation using clearly improper methods.4
3 See also sec. 1.166-1(e), Income Tax Regs., which
provides:
Worthless debts arising from unpaid wages, salaries,
fees, rents, and similar items of taxable income shall
not be allowed as a deduction under section 166 unless
the income such items represent has been included in
the return of income for the year for which the
deduction as a bad debt is claimed or for a prior
taxable year.
4 We could also conclude that respondent has no burden of
production under sec. 7491(c) where, as here, petitioners failed
(continued...)
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