50
Commissioner, 91 T.C. 265, 268-271 (1988), affd. on other issues
875 F.2d 377 (2d Cir. 1989).
We will not perform a similar adjustment for petitioners'
rental payments because Pertinax actually used the space that it
rented, even if it paid slightly more than respondent determined
was reasonable. The evidence does not suggest to us, as it does
for the unreasonable compensation, that the parties' intent and
the economic substance was for funds to be transferred from the
corporate partners to Mr. Munro through the partnership. We are
not overly troubled by the small amount of double taxation that
may result to the corporate partners from their having to pay tax
on their distributive shares of Pertinax's $3,136 rental
deduction disallowance.
Issue 7. Additions to Tax
(a) Negligence
Respondent determined that petitioners Alondra and Edco are
liable for the additions to tax for negligence pursuant to former
section 6653(a)(1)(A) and (B).25 Section 6653(a)(1)(A) provides
an addition to tax for negligence or intentional disregard of
rules and regulations in the amount of 5 percent of the
underpayment if any part thereof is attributable to negligence.
Section 6653(a)(1)(B) imposes an addition to tax in the amount of
25Repealed effective for returns whose due date (determined
without regard to extensions) is after Dec. 31, 1989. Omnibus
Budget Reconciliation Act of 1989 (OBRA 89), Pub. L. 101-239,
sec. 7721(c), 103 Stat. 2399. The current provisions for returns
due after that date are to be found in current secs. 6662(a),
(b)(1), and (c).
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