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Other than the $42,000, petitioners did not report those
amounts as income on their 1989 Federal income tax return or show
that the amounts constituted salary as opposed to self-employment
income. Accordingly, we find that petitioners are liable for
self-employment tax on those amounts for the taxable year 1989.
G. Underpayment Due to Negligence
Respondent determined an addition to tax due to negligence
under section 6653(a)(1)(A) and (B) for petitioners’ 1986 taxable
year. Respondent also determined an accuracy-related penalty due
to negligence under section 6662(a) for petitioners’ 1989 taxable
year. The penalty under section 6662(a) for negligence is
decided under a standard similar to that of the addition to tax
for negligence under section 6653(a)(1).
For the 1986 taxable year, section 6653(a)(1)(A) imposes an
addition to tax equal to 5 percent of the underpayment of the tax
required to be shown on a taxpayer’s return if any part of that
underpayment is due to negligence or disregard of rules or
regulations. Section 6653(a)(1)(B) also provides for an addition
to tax of 50 percent of the interest payable under section 6601
with respect to the portion of the underpayment which is
attributable to negligence or intentional disregard of rules and
regulations. Section 6653(a)(3) defines the term “negligence” to
include any failure to make a reasonable attempt to comply with
the provisions of the Internal Revenue Code. This section also
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