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returns is a basis for imposing the addition to tax under section
6653(a).
It is well established that a taxpayer’s failure to keep
records is a basis for imposing the addition to tax under section
6653(a). See, e.g., Taylor v. Commissioner, T.C. Memo. 1988-389,
affd. without published opinion 887 F.2d 259 (lst Cir. 1989). As
numerous cases have illustrated, however, the IRS and taxpayers
can often differ regarding what constitutes a failure to keep
records sufficient to support liability under section 6653(a).
Section 1.6001-1, Income Tax Regs., provides:
any person subject to tax under subtitle A of the Code
(including a qualified State individual income tax
which is treated pursuant to section 6361(a) as if it
were imposed by chapter 1 of subtitle A), or any person
required to file a return of information with respect
to income, shall keep such permanent books of account
or records, including inventories, as are sufficient to
establish the amount of gross income, deductions,
credits, or other matters required to be shown by such
person in any return of such tax or information.
Respondent contends that the cited regulation required petitioner
to maintain “adequate accounting records”. He supports his
argument by focusing primarily on one exhibit introduced into
evidence by petitioner and generally disparaging petitioner’s
records. Although petitioner chose not to file a posttrial
brief, she adamantly asserted at trial that she maintained
voluminous records and that, while the records were not formal or
perfect, they were routinely maintained in an organized form,
were produced to the accountant who prepared her returns for the
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