Duane D. & Ina R. Gay - Page 9




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         result, have acknowledged that an underpayment exists for each               
         such year.  Petitioners offered no evidence, and advance no                  
         argument, under section 6662 with respect to their return treat-             
         ment for the years at issue of (1) the various items as to which             
         respondent made determinations that petitioners conceded and                 
         (2) the expenditures in question as to which respondent made                 
         determinations that we sustained.5  On the instant record, we find           
         that the burden of production that respondent has under section              
         7491(c) is satisfied.                                                        
              On the instant record, we find that petitioners have failed             
         to carry their burden of showing that they were not negligent and            
         did not disregard rules or regulations, or otherwise did what a              
         reasonable person would do, with respect to the underpayment for             
         each of the years at issue.                                                  
              On the instant record, we further find that petitioners have            
         failed to carry their burden of showing that there was reasonable            
         cause for, and that they acted in good faith with respect to, the            
         underpayment for each of the years at issue.  See sec.                       
         6664(c)(1).                                                                  
              On the record before us, we find that petitioners have                  
         failed to carry their burden of establishing that they are not               
         liable for each of the years at issue for the accuracy-related               

               5The record does not show that any records that petitioners            
          maintained were sufficient under sec. 6001 and sec. 1.6001-1(a),            
          Income Tax Regs.  See sec. 1.6662-3(b)(1), Income Tax Regs.                 






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