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stipulation), which we accept. Among other things, the
stipulation disposes of the deficiency in tax and accuracy-
related penalty for 1999. The stipulation also provides that
petitioners’ taxable income, as reported on their 2000 Form 1040,
U.S. Individual Income Tax Return (the Form 1040), is increased
by $313,804. At the trial, petitioners conceded that a $70,000
portion of their reported bad debt deduction of $185,000 for 2000
was not allowable. Respondent agreed that petitioners would be
allowed a bad debt deduction of $120,000 (which amount,
intentionally, is $5,000 greater than the difference between
$185,000 and $70,000). Petitioner further agreed that the
underpayment in tax resulting from the disallowed portion of the
deduction ($65,000) would be subject to the accuracy-related
penalty. We accept that concession and those agreements. That
leaves for our disposition only the question of whether the
accuracy-related penalty applies to any or all of the
underpayment in tax resulting from the stipulation that
petitioners underreported their 2000 taxable income by $313,804.
All section references are to the Internal Revenue Code of
1986, as amended and in effect for 2000, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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