- 21 -
dispositive.7 Petitioner has satisfied its burden of proving
that disallowance of the depreciation deductions on the grounds
adduced therefor by respondent was improper.8
3. Accuracy-Related Penalty
Section 6662 provides for a penalty equal to 20 percent of
any portion of the underpayment that is attributable to
negligence or disregard of rules or regulations. Sec. 6662(a)
and (b)(1). Negligence generally is defined as lack of due care
or failure to do what a reasonable and ordinarily prudent person
would do under the circumstances. Neely v. Commissioner, 85 T.C.
934, 942 (1985); cf. sec. 6662(c). The penalty can be avoided by
good faith reliance on the expertise of a professional adviser
after full disclosure of relevant information. United States v.
Boyle, 469 U.S. 241, 250-251 (1985); Patin v. Commissioner,
88 T.C. 1086, 1129-1131 (1987), affd. sub nom. Gomberg v.
Commissioner, 868 F.2d 865 (6th Cir. 1989), affd. without
published opinion sub nom. Hatheway v. Commissioner, 856 F.2d 186
7 Cf., e.g., Gill v. Commissioner, T.C. Memo. 1994-92, affd.
___ F.3d ___ (6th Cir. Jan. 23, 1996), where we disallowed
depreciation deductions claimed by a corporation with respect to
a residence furnished to its shareholder-employee, because the
primary purpose for the corporation’s acquisition and maintenance
of the residence was to serve the shareholder’s personal benefit.
8 The deduction provided by sec. 167 is limited to a
reasonable allowance. Respondent has not challenged the
depreciation deductions on the ground that the expenditures for a
pool, pool house, master bedroom, interior redecorations, and the
like were extravagant or extraneous to the business purpose of
the residence.
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