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Petitioners attached to their return a Form 8829, Expenses
for Business Use of Your Home, but did not claim a deduction for
home office expense on Schedule C. Shortly before trial,
petitioners asserted they were entitled to deduct $3,506 of home
office expense. Petitioners offered no evidence, however, that
any portion of their home meets the requirements of section
280A(c)(1). Accordingly, they are not entitled to a deduction.
2. Accuracy-Related Penalty Under Section 6662(a)
Section 6662(a) provides that a taxpayer may be liable for a
penalty of 20 percent of the portion of an underpayment of tax
attributable to negligence or disregard of rules or regulations.
Sec. 6662(a) and (b)(1). Negligence includes any failure by the
taxpayer to keep adequate books and records or to substantiate
items properly. Sec. 1.6662-3(b)(2), Income Tax Regs. Disregard
of rules or regulations includes any careless, reckless, or
intentional disregard. Sec. 1.6662-3(b)(1), Income Tax Regs. An
exception to the section 6662(a) penalty applies when the
taxpayer demonstrates (1) there was reasonable cause for the
underpayment, and (2) the taxpayer acted in good faith with
respect to the underpayment. Sec. 6664(c).
Respondent determined a $1,414.60 penalty against
petitioners pursuant to section 6662(a). Under section 7491(c),
the Commissioner bears the burden of production with respect to
the accuracy-related penalty. To meet this burden, the
Commissioner must come forward with sufficient evidence
indicating that it is appropriate to impose the penalty. Higbee
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