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PETITIONER: I am suggesting to you that they are
unbelievable to me * * *. The numbers are internally
inconsistent in some of these financial statements in
that they portray an operation which is losing money.
* * * [NTG] should not have lost money and I can show
you, by testifying with respect to elements of those
financial statements, that they were, in fact, false
financial statements.
NTG continued in operation until March of 1990, and
petitioner did not present any evidence establishing that prior
to the end of 1989 he abandoned his interest in NTG or that his
interest in NTG became worthless.
Petitioner has not established that NTG incurred a loss in
1989 nor that for 1989 he is entitled to a $35,000 partnership
loss deduction with respect to his interest in NTG.
Respondent has determined an accuracy-related penalty under
section 6662(a) for negligence. The penalty for negligence
equals 20 percent of the amount of the underpayment attributable
to negligence or to disregard of respondent's rules and
regulations. Sec. 6662(a) and (b)(1). Negligence is defined as
the lack of due care or the failure to do what a reasonable and
ordinarily prudent person would do under the circumstances.
Neely v. Commissioner, 85 T.C. 934, 947 (1985). A taxpayer's
failure to maintain adequate books and records is sufficient to
establish negligence. Sec. 6001; Zafiratos v. Commissioner, T.C.
Memo. 1992-135, affd. without published opinion 993 F.2d 880 (3d
Cir. 1993); Moran v. Commissioner, T.C. Memo. 1981-352.
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