- 5 -
sole issue for our determination is whether petitioners are
liable for the additions to tax for negligence under section
6653(a)(1) and (2) for the taxable year 1984. The underlying
transaction in the instant case is essentially identical to the
transaction considered in the test case.
Petitioners claimed $7,959 in deductions and $15,000 in
investment tax credits with respect to their participation in
Encore in the taxable year 1984. Petitioners' investment in the
Encore program totaled $10,000 in 1984. Petitioners earned 60
cents in 1984 from the Encore program. Section 6653(a)(1)
provides for an addition to tax equal to 5 percent of any
underpayment if any part of the underpayment is due to negligence
or intentional disregard of rules and regulations. Section
6653(a)(2) provides for an addition to tax of 50 percent of the
interest on that portion of the underpayment attributable to
negligence. Negligence is defined as a lack of due care or the
failure to act as a reasonable person would act under similar
circumstances. Chamberlain v. Commissioner, 66 F.3d 729, 732
(5th Cir. 1995), affg. in part and revg. in part T.C. Memo. 1994-
228; Heasley v. Commissioner, 902 F.2d 380, 383 (5th Cir. 1990),
revg. T.C. Memo. 1988-408; Neely v. Commissioner, 85 T.C. 934,
947 (1985). Petitioner bears the burden of proving that no part
of the underpayment for the year at issue is due to negligence or
intentional disregard of rules and regulations. Rule 142(a);
Bixby v. Commissioner, 58 T.C. 757 (1972). The negligence
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011