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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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