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substantiation submitted for the amounts claimed on the return is
for a computer purchased in 1997. Based upon the testimony of
petitioner’s husband, this computer was fully depreciated for tax
purposes prior to 2000. Accordingly, the miscellaneous business
expense deductions for “Computer” are disallowed.
In 2001, petitioner claimed a deduction of $1,926 for
worthless securities. In 2000, petitioner claimed deductions of
$4,462 and $5,621 for “Uranium 616 expense” and “Gold 616
expense”, respectively. In 2000 and 2001, petitioner claimed
deductions of $1,647 and $1,649, respectively, under the caption
“Oil and gas”. The information submitted by petitioner relative
to these items are the copies of checks dated in 1983 and 1984.
We found petitioner’s husband’s explanation of these deductions
to be unconvincing, and these deductions are disallowed.
The other miscellaneous business expenses disallowed by
respondent were not adequately substantiated by petitioner, and
respondent’s adjustments are sustained.
The remaining issue is the penalty under section 6662.
Section 6662(a) provides a penalty equal to 20 percent on the
portion of the underpayment of tax attributable to a substantial
understatement of income tax or to negligence. A substantial
understatement of income tax is defined as an understatement of
tax that exceeds the greater of 10 percent of the tax required to
be shown on the tax return or $5,000. Sec. 6662(d)(1)(A). For
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Last modified: November 10, 2007