William E. and Karen L. Kivett - Page 7

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               any nontaxable source or deductible expense of which it has            
               knowledge.  DiLeo v. Commissioner, 96 T.C. at 868.                     

               As noted earlier, petitioner kept no books and records.  The           
          numerous deposits in her account throughout the year corroborated           
          the testimonial evidence that indeed a gifting club existed and             
          that the activity was conducted by and managed by petitioner.               
          The Court is satisfied that, in the bank deposits analysis,                 
          respondent made the proper allowances or credits for deposits               
          that did not constitute gross income.  Petitioner presented no              
          documentary evidence to disprove respondent’s analysis.                     
          Accordingly, the Court sustains respondent’s determination that             
          petitioner realized $72,434 in income during the year at issue.             
               The remaining issue is respondent’s determination that                 
          petitioners are liable for the accuracy-related penalty under               
          section 6662(a) for negligence or disregard of rules or                     
          regulations for the year 1997.  Section 6662(a) provides that, if           
          it is applicable to any portion of an underpayment in taxes,                
          there shall be added to the tax an amount equal to 20 percent of            
          the portion of the underpayment to which section 6662 applies.              
          Section 6662(b)(1) provides that section 6662 shall apply to any            
          underpayment attributable to negligence or disregard of rules or            
          regulations or to a substantial understatement of tax.                      
               Section 6662(c) provides that the term "negligence" includes           
          any failure to make a reasonable attempt to comply with the                 

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