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burden of proving that respondent's determination is erroneous.
Rule 142(a); Luman v. Commissioner, 79 T.C. 846, 860-861 (1982).
In an amendment to answer, respondent asserted that
petitioners Pace were liable for the negligence additions to tax
under section 6653(a)(1) and (2). Because these additions to tax
were raised for the first time in respondent's amendment to
answer, respondent bears the burden of proof on this issue. Rule
142(a); Vecchio v. Commissioner, 103 T.C. 170, 196 (1994).
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).
When petitioners claimed the disallowed deductions and tax
credits, they had no knowledge of the plastics or recycling
industries. Petitioners contend that they reasonably relied on
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