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6662(a) provides a penalty equal to 20 percent of the portion of
the underpayment, in this case, that is attributable to
negligence or disregard of the rules or regulations. Sec.
6662(a) and (b)(1). The burden is on the taxpayer to show a lack
of negligence. Rule 142(a); Bixby v. Commissioner, 58 T.C. 757,
791-792 (1972).
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).
When considering the question of negligence, we evaluate the
particular facts of each case, judging the relative
sophistication of the taxpayers, as well as the manner in which
they approached their transactions and reporting position.
McPike v. Commissioner, T.C. Memo. 1996-46.
A taxpayer may avoid liability for negligence by relying on
competent professional advice, if it was reasonable to rely on
such advice. United States v. Boyle, 469 U.S. 241, 250-251
(1985); Freytag v. Commissioner, 89 T.C. 849, 888 (1987), affd.
904 F.2d 1011, 1017 (5th Cir. 1990), affd. 501 U.S. 868 (1991).
Reliance on professional advice, standing alone, is not an
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