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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).
Petitioners each contend that they were reasonable in
claiming deductions and investment credits with respect to their
investment in Empire. To support this contention, petitioners
each allege, in general terms, the following: (1) That claiming
the deductions and credits with respect to Empire was reasonable
in light of a so-called oil crisis in the United Sates in 1981,
and (2) that in claiming the deductions and credits, petitioners
reasonably relied upon Gallagher and the offering materials.
Petitioners argue, in general terms, that they were
reasonable in claiming the deductions and credits related to
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