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income tax return for each year in issue, but it neglected to do
so. Given the fact that taxpayers have a statutory duty to file
timely income tax returns, we believe that a reasonable and
ordinarily prudent person would have complied with the statutory
duty to file timely such a return. We also believe that breach
of this duty is evidence of negligence. Condor Intl., Inc., v.
Commissioner, 98 T.C. 203, 225 (1992), affd. in part and revd. in
part 78 F.3d 1355 (9th Cir. 1996); Emmons v. Commissioner,
92 T.C. 342, 349 (1989), affd. 898 F.2d 50 (5th Cir. 1990). The
fact that petitioner was negligent in the instant case is also
supported by the fact that petitioner erroneously claimed
deductions for the interest expenses and its shareholder’s legal
fees. See Condor Intl. Inc., v. Commissioner, supra at 225;
Emmons v. Commissioner, supra at 349. We hold for respondent on
this issue.
5. Section 6662
Respondent also determined that petitioner's underpayments
of Federal income taxes for the 1989 and 1990 taxable years were
due to negligence, and, accordingly, that they were subject to
section 6662(a). Section 6662(a) imposes an accuracy-related
penalty equal to 20 percent of the portion of the underpayment
that is attributable to negligence. See also sec. 6662(b)(1).
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