Alex and Tonja Oria - Page 9

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          Commissioner, 115 T.C. 523, 542 (2000).  Negligence includes any            
          failure to make a reasonable attempt to comply with the                     
          provisions of the internal revenue laws or to exercise ordinary             
          and reasonable care in the preparation of a tax return.  Sec.               
          1.6662-3(b)(1), Income Tax Regs.                                            
               The Commissioner bears the burden of production with respect           
          to the accuracy-related penalty.  Sec. 7491(c).  In order to meet           
          that burden, the Commissioner must produce sufficient evidence              
          that it is appropriate to impose the penalty.  Higbee v.                    
          Commissioner, 116 T.C. 438, 446 (2001).  We may take a taxpayer’s           
          concession into account in determining whether the Commissioner             
          has carried his burden.  See, e.g., Rogers v. Commissioner, T.C.            
          Memo. 2005-248.  Petitioners have conceded that they understated            
          their taxable income on account of: (1) erroneous credits to Mr.            
          Oria’s drawing account resulting from fictitious payments to Mr.            
          Loeser or one of his affiliates, (2) Mr. Oria’s personal expenses           
          charged on Medico’s American Express card, (3) Mr. Oria                     
          depositing Medico’s receipts into his personal account, and (4)             
          Medico’s payment of Mr. Oria’s golf club and other personal                 
          expenses.  Petitioners’ concessions are sufficient for us to                
          conclude that respondent has carried his burden.  Mr. Oria signed           
          all of Medico’s checks issued in 2000, and he generally performed           
          all duties connected with its business.  Given Mr. Oria’s                   
          business degree, his experience in business, and his knowledge of           
          both Medico’s and his own affairs, petitioners’ tax treatment of            
          the conceded items is not plausible.  Mr. Oria failed to use the            

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