-57-
Section 6653(a) for 1976 and 1980 imposes an addition to tax
if any part of an underpayment of tax is due to negligence or
intentional disregard of rules or regulations. Negligence is the
lack of due care or failure to do what a reasonable and ordinarily
prudent person would do under the circumstances. Neely v.
Commissioner, 85 T.C. 934, 947 (1985).
Based upon the record before us, we conclude that respondent
has not satisfied her burden of proof on this issue. Thus,
petitioners are not liable for the section 6653(a) additions to tax
for 1976 and 1980.
Issue 3. Section 6621(c) Additional Interest
The third issue is whether petitioners are liable for
additional interest for 1976 and 1980. Respondent determined that
petitioners are liable for the increased rate of interest provided
in section 6621(c) (formerly section 6621(d)). Respondent has the
burden of proof on this issue with regard to 1976 (because it is a
new matter raised in respondent’s amended answer) and petitioners
have the burden of proof with regard to 1980.
Section 6621(c) provides for an interest rate on substantial
underpayments attributable to tax-motivated transactions that is
120 percent of the underpayment rate provided in section 6601. See
Stanley Works & Subs. v. Commissioner, 87 T.C. 389, 413-415 (1986).
Section 6621(c) applies to interest accrued after December 31, 1984,
even though the transaction was entered into prior to the date of
enactment of section 6621(c). Solowiejczyk v. Commissioner, 85 T.C.
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