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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 and no engineering or technical background.
Petitioners did not independently investigate the Sentinel EPE
recyclers. Petitioners contend that they were reasonable in
claiming deductions and credits with respect to Bellvine's
investment in Northeast and attempt to distinguish their cases
from Provizer v. Commissioner, supra, by arguing that the
circumstances of their investment were unique. Petitioners
contend that it was reasonable for them to rely on Roberts
because: (1) Kravitz had prior dealings with Roberts in real
estate matters, and (2) Roberts had waived his usual commission
for petitioners.
Under some circumstances a taxpayer may avoid liability for
the additions to tax under section 6653(a)(1) and (2) if
reasonable reliance on a competent professional adviser is shown.
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