- -32
what a reasonable and ordinarily prudent person would do under
the circumstances. Neely v. Commissioner, 85 T.C. 934, 947
(1985).
We conclude that petitioner has failed to show that the
reporting of items which we have decided herein were not
correctly reported, and of some items petitioner has conceded,
was not due to negligence. Petitioner relied on the advice of
his accountant. However, he testified that he did not review the
returns for errors. Further, it is clear that petitioner's
accountant was not supplied with all information necessary to
prepare the returns. Petitioners took deductions for losses from
property that they did not own and failed to keep adequate books
and records with regard to their income from the law partnership.
We, therefore, sustain the additions to tax for negligence
determined by respondent.
Also at issue is whether petitioner is liable for additions
to tax under section 6661 for the years 1987 and 1988, and under
section 6662 for the year 1989. Section 6661(a), applicable for
the years 1987 and 1988, imposes an addition to tax of 25 percent
of the underpayment attributable to a substantial understatement
of income tax. An understatement is defined as the tax required
to be shown on the return less the tax shown on the return,
reduced by any rebates. Sec. 6661(b)(2). An understatement is
substantial if it exceeds the greater of 10 percent of the tax
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