                                                                           FILED
                            NOT FOR PUBLICATION                            DEC 09 2013

                                                                        MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                      U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


EDWARD DAOUD; ODETTE DAOUD,                      No. 12-70637

               Petitioners - Appellants,         CIR No. 12070-04

  v.
                                                 MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,

               Respondent - Appellee.


                           Appeal from a Decision of the
                             United States Tax Court

                          Submitted November 19, 2013**

Before:        CANBY, TROTT, and THOMAS, Circuit Judges.

       Edward and Odette Daoud appeal pro se from the Tax Court’s decision

upholding the Commissioner of Internal Revenue Services’s notice of deficiency

and penalties against them for tax years 2000 and 2001. We have jurisdiction

under 26 U.S.C. § 7482(a)(1). We review de novo the Tax Court’s legal

          *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
          **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
conclusions, Hongsermeier v. Comm’r, 621 F.3d 890, 899 (9th Cir. 2010), and for

clear error its factual determinations, including the imposition of accuracy-related

penalties, Sparkman v. Comm’r, 509 F.3d 1149, 1161 (9th Cir. 2007), and fraud

penalties, Edelson v. Comm’r, 829 F.2d 828, 832 (9th Cir. 1987). We affirm.

      The Tax Court properly upheld the Commissioner’s deficiency

determination because the Daouds failed to offer evidence that clearly showed a

right to the claimed deductions. See Sparkman, 509 F.3d at 1159 (taxpayer bears

burden of “clearly showing” right to claimed deduction); see also 26 U.S.C.

§ 274(d) (deductions for “any traveling expense” and “for any item with respect to

an activity which is of a type generally considered to constitute entertainment,

amusement, or recreation” requires substantiation of: (1) the amount of such

expense; (2) the time and place of the travel, entertainment, amusement, or

recreation; (3) the business purpose of the expense; and (4) the business

relationship to the taxpayer of the persons entertained).

      The Tax Court did not clearly err in imposing a civil fraud penalty under 26

U.S.C. § 6663(a) because Edward Daoud’s underpayment of his tax liability in

2000 was attributable to fraud. See Bradford v. Comm’r, 796 F.2d 303, 307 (9th

Cir. 1986) (holding that fraud may be inferred from circumstantial evidence,




                                           2                                   12-70637
including such “badges of fraud” as understatement of income, inadequate records,

and implausible or inconsistent explanations of behavior).

      The Tax Court did not clearly err in imposing an accuracy-related penalty

for the Daouds’ underpayment of tax due to negligence or disregard of the rules

and regulations and their substantial understatement of income tax. See 26 U.S.C.

§ 6662(a), (b)(1) & (2) (authorizing penalty not to exceed 20% of the

underpayment for, among other things, negligence or disregard of rules or

regulations or a substantial understatement of income tax); id. § 6662(c) (defining

negligence and disregard); id. § 6662(d)(1)(A) (defining substantial

understatement).

      The Daouds’ contentions that the revenue agent violated their due process

rights are unpersuasive.

      We do not consider matters raised for the first time on appeal. See Padgett

v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009) (per curiam).

      AFFIRMED.




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