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petitioner’s tax-protester arguments as frivolous and without
merit.
III. Section 6662 Penalty
Respondent contends petitioner is liable for a section 6662
penalty because the underpayment of tax was attributable to
negligence or disregard of rules or regulations.
Section 6662(a) imposes a 20-percent accuracy-related
penalty on the portion of any underpayment attributable to
negligence or disregard of rules or regulations. Sec. 6662(b).
The term “negligence” includes any failure to make a reasonable
attempt to comply with the provisions of the Internal Revenue
Code, including any failure by the taxpayer to keep adequate
books and records or to properly substantiate items, and the term
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c); sec. 1.6662-3(b), Income Tax Regs.
Section 7491(c) provides that the Commissioner bears the burden
of production with respect to accuracy-related penalties. See
Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001).
Although petitioner reported business costs incurred from
the operation of a computer software business in 2003, the
evidence shows that he was not carrying on a computer software
business in 2003. He failed to keep adequate books and records
and properly substantiate the reported expenses. Accordingly, he
was not entitled to the claimed business deductions.
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