Albert R. and Phyllis F. Dworkin - Page 12

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                  Respondent determined that petitioners were liable for the                               
            additions to tax under section 6653(a).  Petitioners have the                                  
            burden of proving that respondent's determination of an addition                               
            to tax is erroneous.  Rule 142(a); Luman v. Commissioner, 79 T.C.                              
            846, 860-861 (1982).                                                                           
                  Section 6653(a)(1) imposes an addition to tax equal to 5                                 
            percent of the underpayment if any part of an underpayment of tax                              
            is due to negligence or intentional disregard of rules or                                      
            regulations.  In cases involving negligence, an additional amount                              
            is added to the tax under section 6653(a)(2); such amount is                                   
            equal to 50 percent of the interest payable with respect to the                                
            portion of the underpayment attributable to negligence.                                        
            Negligence is defined as the failure to exercise the due care                                  
            that a reasonable and ordinarily prudent person would employ                                   
            under the circumstances.  Neely v. Commissioner, 85 T.C. 934, 947                              
            (1985).  The question is whether a particular taxpayer's actions                               
            in connection with the transactions were reasonable in light of                                
            his experience and the nature of the investment or business.  See                              
            Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 740 (1973).                                 
                  Petitioner contends that he was reasonable in claiming                                   
            deductions and credits with respect to his investment in                                       
            Northeast and asserts that the instant case is distinguishable                                 
            from Provizer v. Commissioner, supra, in that:  (1) Petitioner                                 
            acted reasonably and exercised due diligence in relying on Grant,                              
            Roberts, and the draft opinion letter in the offering memorandum;                              




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