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A. Section 6653(a)--Negligence
In two notices of deficiency, respondent determined that
petitioners were liable for the additions to tax for negligence
under section 6653(a)(1) and (2) for 1981 and 1982.10
Petitioners have the burden of proving that respondent's
determinations of these additions to tax are erroneous. Rule
142(a); Luman v. Commissioner, 79 T.C. 846, 860-861 (1982).
Section 6653(a)(1) imposes an addition to tax equal to 5
percent of the underpayment if any part of an underpayment of tax
is due to negligence or intentional disregard of rules or
regulations. Section 6653(a)(2) imposes an addition to tax equal
to 50 percent of the interest payable with respect to the portion
of the underpayment attributable to negligence or intentional
disregard of rules or regulations.
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 negligence addition to tax, we evaluate the
particular facts of each case, judging the relative
10 In the notice of deficiency for taxable year 1982,
respondent referred to sec. 6653(a)(2) as sec. 6653(a)(1)(B).
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