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circumstances that would support petitioners’ position that the
December 2, 1999 transaction was not a sale of lot 5 but was a
financing transaction in which petitioners engaged.39
On the record before us, we find that petitioners have
failed to carry their burden of establishing that there was
reasonable cause for, and that they acted in good faith with
respect to, the portion of the underpayment for 1999 that is
attributable to their failure to report the December 2, 1999
39Petitioners also contend that they did not receive Form
1099-S that the settlement agent for the December 2, 1999 trans-
action issued with respect to that transaction and that therefore
they were not “on notice” that that transaction was shown in that
form and reported to respondent as a sale. Even if, as petition-
ers claim, they did not receive Form 1099-S with respect to the
December 2, 1999 transaction, they received warnings that that
transaction was to be shown in Form 1099-S and reported to
respondent as a sale. The December 2, 1999 settlement statement
stated in pertinent part:
SUBSTITUTE FORM 1099 SELLER STATEMENT: The information
contained herein is important tax information and is
being furnished to the Internal Revenue Service. If
you are required to file a return, a negligence penalty
or other sanction will be imposed on you if this item
is required to be reported and the IRS determines that
it has not been reported. The Contract Sales Price
described on line 401 above constitutes the Gross
Proceeds of this transaction.
Moreover, petitioners signed a document that was attached to the
December 2, 1999 settlement statement. That document, entitled
“ACKNOWLEDGEMENT AND RECEIPT OF SETTLEMENT STATEMENT”, provided
in pertinent part:
SELLER(S) further acknowledge that receipt of a
copy hereof shall constitute a receipt at closing of
IRS Form 1099-S [Proceeds From Real Estate Transac-
tions].
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