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respondent asserted that Wilson was liable for the negligence
additions to tax under section 6653(a)(1) and (2) for 1981, and
that Sorey was liable for the negligence additions to tax under
section 6653(a) for 1978 and 1979. Because these additions to
tax were raised for the first time in respondent's amendments to
answer, respondent bears the burden of proof on these issues.
Rule 142(a); Vecchio v. Commissioner, 103 T.C. 170, 196 (1994).
Section 6653(a) for 1978 and 1979 and section 6653(a)(1) for
taxable year 1981 provide for 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. Section 6653(a)(2) for taxable year 1981 provides
for an addition to tax 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).
As a result of their investments in EI, petitioners had
available to them investment tax and business energy credits with
respect to EI's investment in Clearwater that exceeded their
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