Ellwest Stereo Theatres of Memphis, Inc., et al. - Page 19

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            through 1987 the amount of the addition to tax was 5 percent of                                
            the entire underpayment plus 50 percent of the interest payable                                
            with respect to the portion of the underpayment attributable to                                
            negligence or intentional disregard of rules or regulations.                                   
            Sec. 6653(a)(1) and (2) (taxable years 1981 through 1985);                                     
            sec. 6653(a)(1)(A) and (B) (taxable years 1986 and 1987).  For                                 
            taxable years 1980 and 1988 the addition to tax was an amount                                  
            equal to 5 percent of the underpayment.  Sec. 6653(a) (for                                     
            taxable year 1980); sec. 6653(a)(1) (for taxable year 1988).                                   
            Negligence is defined 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 taxpayer bears the burden of proof.  Rule 142(a);                                 
            Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).                                            
                  Failure to file timely tax returns constitutes prima facie                               
            evidence of negligence.  Emmons v. Commissioner, 92 T.C. 342,                                  
            349 (1989), affd. 898 F.2d 50 (5th Cir. 1990).  “The type of                                   
            evidence necessary to meet or rebut a prima facie case of                                      
            negligence arising in a late filing situation is that which                                    
            indicates the existence of an adequate and reasonable excuse or                                
            justification for the delinquent filing.”  Id. at 350.  Where the                              
            taxpayer’s evidence is insufficient to prove reasonable cause and                              
            absence of willful neglect for purposes of section 6651(a)(1),                                 
            the taxpayer cannot carry its burden of proof for purposes of                                  






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