Samuel S. and Laura M. Pinkney - Page 12

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          v. Commissioner, 116 T.C. 438, 446 (2001).  Under Rule 34(b),               
          however, the taxpayer is required to assign error in the petition           
          to each and every error alleged to have been committed by the               
          Commissioner, including issues with respect to which the                    
          Commissioner bears the burden of proof.  Any issue not raised in            
          the assignments of error is deemed to be conceded.  Id.; see also           
          Swain v. Commissioner, 118 T.C. 358, 363-364 (2002).                        
               Petitioners did not assign error to the determination of the           
          penalty in their petition.  Nor did they dispute the                        
          determination at trial.  Accordingly, the penalty is deemed to be           
          conceded.  See Rule 34(b); Swain v. Commissioner, supra.  Even if           
          petitioners had challenged the penalty, petitioners failed to               
          keep adequate books or records or to properly substantiate the              
          disallowed expense deductions.  See sec. 1.6662-3(b)(1), Income             
          Tax Regs.  Petitioners introduced no evidence to indicate their             
          failure was due to reasonable cause or good faith.  See sec.                
          6664(c).  Accordingly, respondent’s determination is sustained.             
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   
               To reflect the foregoing,                                              

                                                  Decision will be entered            
                                             under Rule 155.                          








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