- 9 - deduct their cash investment in Century based upon principles of equity. See Paxman v. Commissioner, 50 T.C. 567, 576 (1968), affd. 414 F.2d 265 (10th Cir. 1969); Farmer v. Commissioner, T.C. Memo. 1994-342. 2. Whether Petitioners Were Negligent Negligence is a lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances. Zmuda v. Commissioner, 731 F.2d 1417, 1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982); Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir. 1967), affg. in part and remanding in part 43 T.C. 168 (1964) and T.C. Memo. 1964-299; Neely v. Commissioner, 85 T.C. 934, 947 (1985). To prevail on the issue of negligence, petitioners must prove that their actions in connection with this transaction were reasonable in light of their experience and business sophistication. Avellini v. Commissioner, T.C. Memo. 1995-489; Lucas v. Commissioner, T.C. Memo. 1995-341; Poplar v. Commissioner, T.C. Memo. 1995-337; see Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 740 (1973). If a taxpayer is misguided, is unsophisticated in tax law, and acts in good faith, we may conclude that he or she is not liable for the addition to tax for negligence. Collins v. Commissioner, 857 F.2d 1383, 1386 (9th Cir. 1988), affg. Dister v. Commissioner, T.C. Memo. 1987-217; Hanson v. Commissioner, 820Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011