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The Commissioner bears the burden of production with respect
to all penalties. See sec. 7491(c). The burden imposed by
section 7491(c), however, is merely for the Commissioner to come
forward with evidence regarding the appropriateness of applying a
particular addition to tax or penalty to the taxpayer. The
Commissioner need not negate all defenses to the additions or
penalties. See Higbee v.Commissioner, 116 T.C. 438, 446 (2001).
Respondent has met his burden with respect to the negligence
claim by establishing that petitioners failed to maintain
adequate and accurate accounts of their expenses in taxable years
2002 and 2003. Moreover, petitioners have not shown that there
was reasonable cause for their failures to maintain such records.
Therefore, we sustain respondent’s determination of the penalties
under section 6662(a) for taxable years 2002 and 2003.
To the extent that we have not addressed any of the parties’
arguments, we have considered them and conclude they are without
merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decisions will be entered
under Rule 155.
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