                         T.C. Memo. 2000-90



                       UNITED STATES TAX COURT



            WILLIAM R. & CAROL ENYART, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4336-98.                      Filed March 14, 2000.



     Benjamin R. Cooksey, for petitioners.

     Mary Ann Waters, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    Respondent determined a deficiency in, and

an accuracy-related penalty under section 6662(a)1 on, petition-

ers’ Federal income tax (tax) for 1992 in the amounts of $88,442



     1
      All section references are to the Internal Revenue Code in
effect for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
                                  - 2 -

and $17,688, respectively.

     The issues remaining for decision are:

     (1) Are petitioners required to include in their taxable

income for the year at issue the amount of $300,000 as consider-

ation for the covenant by petitioner William R. Enyart (Mr.

Enyart) not to compete with B & L Utility Contractors, Inc.

(B&L)?   We hold that they are.

     (2) Are petitioners liable for the year at issue for the

accuracy-related penalty under section 6662(a)?    We hold that

they are.

     This case was submitted fully stipulated.    The facts that

have been stipulated are so found.

     Petitioners resided in South Point, Ohio, at the time the

petition was filed.

     In January 1981, Mr. Enyart and John Milem, Sr. (Mr. Milem),

incorporated B&L, which issued to each of them 50 percent of its

common stock.   In August 1983, Mr. Enyart purchased all of Mr.

Milem’s B&L common stock and became its sole stockholder.

     In April 1985, Janet Robinson Griffiths (Ms. Griffiths)

purchased 102 shares of B&L common stock.   As a result of a

special meeting of B&L’s stockholders in July 1988, B&L issued

two additional shares of its common stock to Mr. Enyart, thereby

making him and Ms. Griffiths equal stockholders of B&L.

     From January 1992 through April 1992, B&L experienced a
                              - 3 -

period of financial hardship that caused its two stockholders,

Mr. Enyart and Ms. Griffiths, to undergo a “friendly disagree-

ment” over how to extricate B&L from its financial difficulties.

Mr. Enyart and Ms. Griffiths ultimately agreed around June 1992

that Mr. Enyart was to leave B&L.   In order to implement that

agreement, Mr. Enyart and B&L entered into a “SALE AND PURCHASE

AGREEMENT” (agreement) dated August 17, 1992.   Under that agree-

ment, inter alia, Mr. Enyart agreed to sell, and B&L agreed to

buy, all of his B&L common stock for $50,000 payable at the time

of B&L’s purchase (i.e., redemption) of that stock.   That sale

and purchase of Mr. Enyart’s B&L common stock was effected in

1992.

     Because Ms. Griffiths also wanted Mr. Enyart to enter into a

covenant not to compete with B&L, but B&L lacked the funds to pay

him cash for such a covenant, the agreement provided in pertinent

part:

          [1](b). ENYART agrees and covenants that he will
     not directly or indirectly or as an officer or owner of
     any entity compete with B&L in the bidding for or
     contracting for work upon any project where the price
     for work to be performed by either party is Five Hun-
     dred Thousand Dollars ($500,000.00) or more for a
     period of one (1) year from the date of closing, which
     is effective upon closing, at a price of Three Hundred
     Thousand Dollars ($300,000.00) in equipment, as further
     set forth below; and

        *       *       *       *        *       *       *

          2(a). Equipment of the value set forth in 1(b).,
     above, shall be transferred by B&L to ENYART at clos-
     ing. Such equipment shall be selected by ENYART from
                          - 4 -

the Equipment Listing attached hereto as Exhibit A, and
shall be valued for transfer and payment purposes
hereunder at One Hundred Fifteen per cent (115%) of the
values set forth for the items of equipment selected by
ENYART.

      (b). All such equipment is presently subject to
financing liens, and ENYART agrees to accept the trans-
fer of such equipment subject to such liens. B&L will
remain responsible for the payment of all such liens,
as now financed, and shall furnish ENYART with releases
of lien when payment has been made and such liens are
released by the financing institution(s).

      (c). If transfer of such equipment, or any part
thereof, cannot be effected because of objection by the
lending institution(s) or otherwise, then ENYART shall
have the use of such equipment, by appropriate lease or
other reasonable method, until the financed amounts
shall have been paid by B&L and releases of lien se-
cured, at which time the equipment shall be transferred
to ENYART.

     (d). ENYART agrees that he will maintain at his
own cost all insurance required by the lending institu-
tion(s) on such equipment, and further agrees that so
long as any of such equipment remains titled to B&L he
will furnish at his own cost liability insurance with a
company acceptable to B&L for the benefit of B&L as to
the use of such equipment in minimum amounts equal to
those currently in force for B&L’s benefit, by the
naming of B&L as an additional or named insured on
insurance policies held by ENYART or other effective
manner. Each such policy shall contain a provision
that it may not be canceled for any reason without
thirty (30) days’ prior written notice to B&L. ENYART
shall furnish B&L with written certificates of insur-
ance evidencing the above insurance at all times,
containing the above provision. B&L agrees that it
will pay one-half (½) the cost of liability insurance
in excess of One Million Dollars ($1,000,000.00).

     (e). ENYART shall be fully responsible for the
payment of all taxes, license fees and similar costs
relating to all equipment and other matters hereunder
on a timely basis, without contribution by B&L.

     (f).   B&L presently holds a policy on the life of
                               - 5 -

     Janet R. Griffiths in the face amount of One Million
     Dollars ($1,000,000.00) and will name the lending
     institution(s) holding liens on the equipment involved
     herein as beneficiary(ies) in the amount necessary to
     pay such liens.

        *       *       *        *       *        *      *

          5. The parties further agree that, they will
     execute such other and further documents as are reason-
     ably necessary to effect the sales and transfers con-
     templated herein.

     Pursuant to the agreement, Mr. Enyart selected $300,000

worth of certain assets owned by B&L (B&L equipment) as consider-

ation for his covenant not to compete with B&L.    (We shall refer

to Mr. Enyart’s covenant not to compete with B&L as Mr. Enyart’s

covenant.)   On August 20, 1992, pursuant to paragraph 5 of the

agreement, Mr. Enyart and B&L entered into a “BILL OF SALE AND

CONVEYANCE” (bill of sale and conveyance) which effected the

transfer of the B&L equipment from B&L to Mr. Enyart.   The bill

of sale and conveyance provided in pertinent part:

          FOR VALUE RECEIVED, B & L Utility Contractors,
     Inc., an Ohio corporation (B&L), hereby BARGAINS,
     SELLS, CONVEYS, ASSIGNS and TRANSFERS unto William R.
     Enyart (Enyart) all items of equipment, including but
     not limited to motor vehicles, which are set forth on
     the list attached hereto and made a part hereof, marked
     as “Attachment A”, subject to the following terms and
     conditions:

          1. Enyart is fully familiar with each item herein
     conveyed and accepts same in an “as is, where is”
     condition, without warranty whether express or implied.

          2. Enyart shall be fully responsible for and pay
     any and all cost and expense involved directly or
     indirectly in the conveyance, transfer and titling of
     such items, including but not limited to sales or
                               - 6 -

     transfer taxes, fees, and recording costs.

          3. Enyart will transfer title to the listed
     equipment immediately upon delivery of this instrument,
     and shall be fully responsible for all liabilities
     attached thereto, except as set forth in paragraph 4,
     below, upon acceptance of this instrument.

          4. Enyart acknowledges that the items herein
     conveyed are jointly and/or severally subject to fi-
     nancing or other liens evidencing indebtedness owed
     thereon, and accepts such items subject to such liens.
     B&L will remain responsible for the payment of such
     indebtedness and will provide releases of such liens at
     such time as the indebtedness is paid and such releases
     are executed by the entities holding such liens.
     Enyart shall be responsible, at his own cost, for the
     fulfillment of all conditions of the financing docu-
     ments relating to such liens and indebtedness, includ-
     ing but not limited to the providing of insurance
     thereon, excepting only the payment of such indebted-
     ness. Enyart further agrees that he will execute any
     documents required by the entities holding liens for
     the transfer of titles to the equipment.

     In August 1992, Mr. Enyart incorporated Bill Enyart and Sons

Contracting, Inc. (Enyart Company) and used the B&L equipment to

capitalize it and its operations.

     On May 14, 1992, B&L signed a promissory note payable to

Bank of Ashland in the principal amount of $900,000 at 8.75

percent interest per year (B&L’s promissory note), which was to

be paid in 36 installments of $28,528 that were to commence on

June 13, 1992.   Pursuant to the terms of B&L’s promissory note,

B&L gave a security interest to Bank of Ashland in (1) “the goods

or property being purchased”, (2) B&L’s “deposit accounts and

other rights to the payment of money”, and (3) “other property”

described in that note as “VARIOUS VEHICLES”.   B&L’s promissory
                               - 7 -

note was signed on behalf of B&L by Ms. Griffiths as vice presi-

dent, and Mr. Enyart as president, of B&L.

     Notes to B&L’s financial statements for the periods ended

December 31, 1992 and 1991, indicated that B&L’s long-term debt

at the end of the period ended December 31, 1992, consisted of,

inter alia, a balance of $742,299 with respect to B&L’s promis-

sory note.2   Fyffe, Jones & Associates, PSC (Fyffe, Jones),

conducted a review of those financial statements which consisted

principally of inquiries of B&L personnel and analytical proce-

dures applied to B&L’s financial data.   The review conducted by

Fyffe, Jones was substantially more limited in scope than an

audit conducted in accordance with generally accepted auditing

standards.

     Enyart Company filed a U.S. Corporation Income Tax Return,

Form 1120, for 1992 (Enyart Company’s return), which was signed

by Mr. Enyart.   In that return, Enyart Company reported that it

placed the B&L equipment into service in 1992 and claimed a

depreciation deduction with respect to that equipment.   It

calculated that claimed depreciation deduction by using a cost

basis of slightly over $300,000.


     2
      The notes to B&L’s financial statements for the periods
ended Dec. 31, 1992 and 1991, indicated that B&L had additional
long-term debt at the end of 1992 consisting of (1) $17,213 of
principal on a note payable to Bank of Ashland which was secured
by an unidentified truck and (2) $100,002 of principal on a note
payable to Bank of Ashland that was described in those notes to
B&L’s financial statements as a “renewable line of credit.”
                                - 8 -

     B&L issued a Form 1099-B to Mr. Enyart for 1992 that showed

$50,000 of income relating to the sale to B&L of his B&L stock.

B&L also issued a Form 1099-Misc to Mr. Enyart for 1992 that

showed $300,000 of income, i.e., the value of the B&L equipment

that it transferred to Mr. Enyart as consideration for Mr.

Enyart’s covenant.

     Petitioners filed a joint U.S. Individual Income Tax Return,

Form 1040, for 1992 (joint return), which was signed by Terry R.

Fyffe (Mr. Fyffe) as paid return preparer.    Petitioners reported

the $50,000 that Mr. Enyart received for the sale of his B&L

stock in Schedule D, Capital Gains and Losses (Schedule D), of

their joint return.   Petitioners did not report as ordinary

income in their joint return the $300,000 worth of B&L equipment

that B&L transferred to Mr. Enyart during 1992 for Mr. Enyart’s

covenant.   Instead, petitioners attached Form 6252, Installment

Sale Income (Form 6252), to that return.    Petitioners reported in

Form 6252 the $300,000 value of the B&L equipment as the selling

price of certain unidentified property which they claimed was

sold on the installment method.     Petitioners indicated in Form

6252 that the unidentified property which they claimed was sold

on the installment method was acquired on January 1, 1983, and

sold on August 31, 1992.    Petitioners claimed no basis in Form

6252 for that property.    Petitioners claimed in Form 6252 that

they received $20,000 during 1992 with respect to the sale of the
                               - 9 -

unidentified property claimed to have been sold on the install-

ment method and that their installment sale income for 1992

equaled $20,000.   The $20,000 of installment sale income claimed

in Form 6252 was then reported as “Section 1231 gain from in-

stallment sales from Form 6252" in Form 4797, Sales of Business

Property, which petitioners attached to their joint return and as

“Gain from Form 4797" in Schedule D of that return.

     In the notice of deficiency (notice) issued to petitioners

for the year at issue, respondent determined that Mr. Enyart

received from B&L as consideration for Mr. Enyart’s covenant the

B&L equipment valued at $300,000.    Consequently, respondent

determined in the notice to increase petitioners’ taxable income

for 1992 by $300,000.3   Respondent further determined in the

notice that petitioners are liable for 1992 for the accuracy-

related penalty under section 6662(a).

     Petitioners bear the burden of proving that the determina-

tions in the notice are erroneous.     See Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933).    That this case was submit-

ted fully stipulated does not change that burden or the effect of

a failure of proof.   See Rule 122(b); Borchers v. Commissioner,

95 T.C. 82, 91 (1990), affd. 943 F.2d 22 (8th Cir. 1991).


     3
      As a correlative determination, respondent eliminated the
$20,000 of capital gain that petitioners reported in Schedule D
of their joint return as “Gain from Form 4797" (i.e., “Section
1231 gain from installment sales from Form 6252"). Respondent
also made other correlative determinations.
                               - 10 -

      We turn first to the tax consequences for the year at issue

that are attributable to Mr. Enyart’s receipt of the B&L equip-

ment in return for his covenant not to compete with B&L.4     As

framed by petitioners in both their opening and reply briefs, the

issue that we must decide with respect to Mr. Enyart’s covenant

is:

      What amount must Petitioners report as gross income for
      various equipment received pursuant to a covenant not
      to compete agreement wherein Petitioners received the
      “right to use” such equipment that was 100% encumbered
      by financing for which Petitioners were not liable?

Having so framed the issue in this case relating to the B&L

equipment, most of petitioners’ opening and reply briefs nonethe-

less advance contentions and arguments in support of petitioners’

position that Mr. Enyart did not constructively receive the B&L

equipment during the year at issue within the meaning of section

1.451-2(a), Income Tax Regs.   According to petitioners,

      the mere receipt of the [B&L] equipment transferred
      pursuant to the covenant not to compete which was
      encumbered by substantial debt for which Petitioners
      were not liable constitutes a substantial restriction
      thereby disallowing the envokement [sic] of the con-
      structive receipt doctrine.

      The constructive receipt doctrine addresses when income,

although not actually reduced to a taxpayer’s possession, is

constructively received by the taxpayer.   See sec. 1.451-2(a),


      4
      Petitioners concede that any income that they have for the
year at issue which is attributable to the B&L equipment is
ordinary income, and not capital gain as reported in their joint
return.
                              - 11 -

Income Tax Regs.   Petitioners rely on the portion of section

1.451-2(a), Income Tax Regs., which provides that “income is not

constructively received if the taxpayer’s control of its receipt

is subject to substantial limitations or restrictions.”   Id.

     In the instant case, the parties disagree over whether

during 1992 Mr. Enyart received ownership of the B&L equipment as

contended by respondent or received only the right to use that

equipment as contended by petitioners.   The constructive receipt

doctrine does not control resolution of that disagreement.    Nor

does that doctrine govern resolution of the parties’ dispute over

the value of what Mr. Enyart received during the year at issue in

return for his covenant not to compete with B&L.5



     5
      According to petitioners’ reply brief, “the real issue for
the court to decide is how to value the receipt of this [B&L]
equipment given the amount of liens encumbering the property at
such time” as B&L transferred that equipment to Mr. Enyart.
Petitioners have not, however, presented any evidence and make no
argument about their position as to what the value of the B&L
equipment that Mr. Enyart received during 1992 is or the amount
of ordinary income that they have for that year as a result of
B&L’s transfer during that year of the B&L equipment to Mr.
Enyart. Petitioners merely state in their opening brief: “Under
the matching principle, petitioners reported the value of the
[B&L] equipment from a timing perspective with the amortization
deduction taken by B&L.” In their reply brief, petitioners
further state that they

     reported the receipt of the [B&L] equipment in a manner
     consistent with the related amortization deduction
     taken by B&L with whom petitioner negotiated the cove-
     nant not to compete. This method was chosen as Peti-
     tioner did not know how to value the receipt of the
     equipment under this set of facts and there appeared to
     be no statutory or case law on point.
                             - 12 -

     Petitioners advance a number of contentions to support their

position that during the year at issue Mr. Enyart received only

the right to use the B&L equipment, including the following:

(1) The B&L equipment was subject to “virtually 100% financing”

at the time it was transferred to Mr. Enyart; (2) the agreement

states “that Petitioners shall have use of such [B&L] equipment

until the financed amounts have been paid by B&L”; (3) B&L “was

in a dire financial position and its ability to pay off the

substantial amount of debt encumbering the equipment was in grave

question”; and (4) “there was a realistic possibility that B&L

would be unable to make the payments without the bank actually

taking repossession of the equipment leaving petitioners without

the equipment that was transferred pursuant to the agreement.”

The record does not support the foregoing contentions of peti-

tioners.

     The agreement states that at the time the B&L equipment was

transferred to Mr. Enyart it was subject to some unspecified

amount of liens; it does not state, as petitioners contend, that

that equipment was subject to “virtually 100% financing”.

Furthermore, contrary to petitioners’ contention, the agreement

provides that only if the lending institutions holding the liens

to which the B&L equipment was subject objected to the transfer

by B&L of that equipment (or any part thereof) to Mr. Enyart, so

that such a transfer by B&L could not be effected, was Mr. Enyart
                               - 13 -

to “have the use of such equipment, by appropriate lease or other

reasonable method, until the financed amounts shall have been

paid by B&L and releases of lien secured, at which time the

equipment shall be transferred to ENYART”.    There is nothing in

the record that shows that any lending institution holding a lien

on the B&L equipment objected to the transfer by B&L of such

equipment to Mr. Enyart.    Nor does the record establish that

B&L’s transfer of the B&L equipment to Mr. Enyart could not have

been, and was not, effected during the year at issue.      To the

contrary, the bill of sale and conveyance effected during that

year the transfer by B&L to Mr. Enyart of the B&L equipment and

did not merely grant Mr. Enyart the right to use that equipment.

The bill of sale and conveyance provided in pertinent part:

          FOR VALUE RECEIVED, B&L * * * hereby BARGAINS,
     SELLS, CONVEYS, ASSIGNS and TRANSFERS unto William R.
     Enyart * * * all items of [the B&L] equipment * * *
     subject to the following terms and conditions:

           *      *        *      *      *      *      *

               4. Enyart acknowledges that the items herein
          conveyed are jointly and/or severally subject to
          financing or other liens evidencing indebtedness
          owed thereon, and accepts such items subject to
          such liens. B&L will remain responsible for the
          payment of such indebtedness and will provide
          releases of such liens at such time as the indebt-
          edness is paid and such releases are executed by
          the entities holding such liens. Enyart shall be
          responsible, at his own cost, for the fulfillment
          of all conditions of the financing documents re-
          lating to such liens and indebtedness, including
          but not limited to the providing of insurance
          thereon, excepting only the payment of such in-
          debtedness. Enyart further agrees that he will
                               - 14 -

            execute any documents required by the entities
            holding liens for the transfer of titles to the
            equipment.

     The record also shows that during the year at issue B&L was

able to pay off, as they fell due, installments of B&L’s promis-

sory note which might have encumbered the B&L equipment.6       In

this connection, B&L signed the B&L promissory note payable to

Bank of Ashland around mid-May 1992.     That note was in the

principal amount of $900,000 and bore interest at 8.75 percent

per year, which was to be paid in 36 installments of $28,528 that

were to commence on June 13, 1992.      The notes to B&L’s financial

statements for the periods ended December 31, 1992 and 1991, show

that at the end of 1992 the balance remaining on the B&L promis-

sory note was $742,299.    Thus, the record establishes that at

least during 1992, the year at issue, B&L had the ability to, and

did, satisfy its obligations under the B&L promissory note to pay

the monthly installments of principal and interest due under that

note.    On the record before us, we reject petitioners’ assertions

that B&L “was in a dire financial position and its ability to pay

off the substantial amount of debt encumbering the equipment was

in grave question” and that “there was a realistic possibility



     6
      Although the B&L promissory note states that B&L gave a
security interest to Bank of Ashland in, inter alia, goods or
property that B&L was purchasing and various vehicles, it is not
clear from that note or the remainder of the record whether some
or all of the B&L equipment was included within such goods,
property, and vehicles.
                              - 15 -

that B&L would be unable to make the payments [under the B&L

promissory note] without the bank actually taking repossession of

the [B&L] equipment leaving petitioners without the equipment

that was transferred pursuant to the agreement.”

     Based on our examination of the entire record before us, we

find that petitioners have failed to establish that B&L trans-

ferred to Mr. Enyart during the year at issue only the right to

use, and not ownership of, the B&L equipment.7   On that record,

we further find that petitioners have failed to establish that

the value of that equipment was less than $300,000, the value

placed on that equipment by the agreement between B&L and Mr.

Enyart.   Accordingly, we sustain respondent’s determination to

increase petitioners’ taxable income for the year at issue by

$300,000.

     We turn now to respondent’s determination that petitioners

are liable for 1992 for the accuracy-related penalty under

section 6662(a).   Section 6662(a) imposes an accuracy-related

penalty equal to 20 percent of the underpayment of tax resulting

from a substantial understatement of income tax.   An understate-

ment is equal to the excess of the amount of tax required to be


     7
      It is significant that during the year at issue Mr. Enyart
used the B&L equipment to capitalize Enyart Company and its
operations. Mr. Enyart thus exercised during the year at issue
dominion and control over the B&L equipment. It is also notewor-
thy that Enyart Company claimed in its tax return for 1992 a
depreciation deduction with respect to the B&L equipment which
was based upon a cost basis of slightly over $300,000.
                              - 16 -

shown in the tax return over the amount of tax shown in the tax

return, see sec. 6662(d)(2)(A), and is substantial in the case of

an individual if it exceeds the greater of 10 percent of the tax

required to be shown or $5,000, see sec. 6662(d)(1)(A).

     The accuracy-related penalty under section 6662(a) does not

apply to any portion of an underpayment if it is shown that there

was reasonable cause for such portion and that the taxpayer acted

in good faith.   See sec. 6664(c)(1).   The determination of

whether a taxpayer acted with reasonable cause and in good faith

depends on the pertinent facts and circumstances, including the

taxpayer’s efforts to assess his or her proper tax liability, the

knowledge and experience of the taxpayer, and the reliance on the

advice of a professional, such as an accountant.    See sec.

1.6664-4(b)(1), Income Tax Regs.   In the case of claimed reliance

on the accountant who prepared the taxpayer’s tax return, the

taxpayer must establish that correct information was provided to

the accountant and that the item incorrectly claimed or reported

in the return was the result of the accountant’s error.    See Ma-

Tran Corp. v. Commissioner, 70 T.C. 158, 173 (1978).

     Petitioners argue that there was no substantial understate-

ment of income tax for 1992 and that therefore they are not

liable for that penalty.   As a result of our holding that peti-

tioners’ taxable income for 1992 is to be increased by $300,000,

we reject that argument.
                                - 17 -

     Petitioners argue in the alternative that respondent’s

determination under section 6662(a) is wrong because they acted

in good faith and with reasonable cause in reporting only $20,000

of capital gain in their joint return for the year at issue with

respect to Mr. Enyart’s receipt during that year of the B&L

equipment.   To support that alternative argument, petitioners

contend (1) that there was no statutory or case law to guide them

in reporting Mr. Enyart’s receipt of the B&L equipment as consid-

eration for Mr. Enyart’s covenant and (2) that they relied on Mr.

Fyffe to prepare their joint return.     On the record before us, we

reject petitioners’ alternative position under section 6662(a).

     Gross income includes the fair market value of property

received in payment for services.    See sec. 1.61-2(d)(1), Income

Tax Regs.    We have found that “Amounts paid by a purchaser to a

seller for a covenant not to compete are ordinary income to the

seller since they are tantamount to payments for services.”

Schmitz v. Commissioner, 51 T.C. 306, 313 (1968), affd. 457 F.2d

1022 (9th Cir. 1972).    See generally Montesi v. Commissioner, 340

F.2d 97, 100 (6th Cir. 1965), affg. 40 T.C. 511 (1963); Schaefer

v. Commissioner, 105 T.C. 227, 231-232 (1995).     We have found

that petitioners have failed to show that the value of the B&L

equipment which B&L transferred to Mr. Enyart during the year at

issue was less than $300,000.    On the record before us, we reject

petitioners’ contention that there was no statutory or case law
                               - 18 -

to guide them in determining the tax treatment of Mr. Enyart’s

receipt of the B&L equipment in exchange for his covenant not to

compete with B&L.

     As for petitioners’ claimed reliance on Mr. Fyffe, on the

instant record, we reject that claim.    Petitioners have failed to

show what information they provided to Mr. Fyffe in connection

with his preparation of their joint return.    In fact, the record

is devoid of any evidence regarding the preparation of that

return and petitioners’ claimed reliance on Mr. Fyffe.

     Based on our examination of the entire record before us, we

find that petitioners have failed to establish that they acted

with reasonable cause and in good faith in taking the position

reflected in their joint return with respect to the B&L equip-

ment.   We further find on that record that petitioners have

failed to establish any error in respondent’s determination that

they are liable for 1992 for the accuracy-related penalty under

section 6662(a).    Consequently, we sustain that determination.

     We have considered all of the contentions and arguments of

petitioners that are not discussed herein, and we find them to be

without merit and/or irrelevant.

     To reflect the foregoing and the concession of petitioners,


                                     Decision will be entered for

                                respondent.
