- 19 -
as the lack of due care or failure to do what a reasonable and
ordinarily prudent person would do under the circumstances.
Neely v. Commissioner, 85 T.C. 934, 947 (1985). The treatment of
an item may be attributable to negligence if the taxpayer failed
to maintain adequate records to substantiate it properly.
Crocker v. Commissioner, 92 T.C. 899, 917 (1989); Schroeder v.
Commissioner, 40 T.C. 30, 34 (1963); Robbins v. Commissioner,
T.C. Memo. 1981-449. Any part of an underpayment attributable to
a position taken by the taxpayer in reasonable, bona fide
reliance upon professional tax advice is not attributable to
negligence. Ewing v. Commissioner, 91 T.C. 396, 423-424 (1988),
affd. without published opinion 940 F.2d 1534 (9th Cir. 1991);
Jackson v. Commissioner, 86 T.C. 492, 539 (1986), affd. 864 F.2d
1521 (10th Cir. 1989). In order to prove reasonable reliance the
taxpayer must demonstrate that he supplied his adviser with
complete and accurate information. Pessin v. Commissioner, 59
T.C. 473, 489 (1972); Enoch v. Commissioner, 57 T.C. 781, 803
(1972); Gill v. Commissioner, T.C. Memo. 1994-92, affd. without
published opinion 76 F.3d 378 (6th Cir. 1996).
Petitioners have not attempted to contest respondent's
determination of negligence insofar as it applies to their
failure to substantiate the business expense deductions they
claimed. However, Mr. Kelly argues that he acted reasonably in
characterizing his trading losses as ordinary losses on
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011