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operations. Petitioner’s records appear to reflect some business
expenditures, but in most instances we cannot determine whether
the expenditures bear any relationship to the franchise “prong”
of Tasha’s Cafe. Nor has petitioner presented sufficient
evidence for the Court to estimate the amount of any of his
business expenditures.
From the record before us, petitioner has presented some
canceled checks and paid invoices that show deductible
expenditures for legal fees, marketing expenses, and charitable
donations related to his Tasha’s Cafe franchising operations.
Those expenditures amount to $2,195 in legal fees and marketing
expenses for 2001, and $550 in charitable donations for 2002.
Except as noted above, petitioner has not produced
sufficient evidence to persuade us that respondent’s
determinations are in error. Consequently, with the exceptions
noted above, we sustain respondent’s deficiency determination.
IV. Penalties
A. Section 6662(a) Penalty
As noted supra, respondent determined section 6662(a)
penalties of $4,125.40 and $3,258.60 for 2001 and 2002,
respectively. Respondent determined that petitioner’s 2001 and
2002 underpayments of tax were attributable to negligence or
disregard of rules and regulations, or alternatively that the
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