- 30 -
addition to tax or penalty for each year.9 In contesting these
additions and penalty, the corporate petitioner relies primarily
on its position that no deficiency exists, but does argue that
any deficiency due to unreported rebates was due to Mr. Sutton's
lack of education and understanding of accounting practices.
Negligence is the lack of due care or the failure to do what
a reasonable and prudent person would do under the circumstances.
Neely v. Commissioner, 85 T.C. 934, 947 (1985). For purposes of
the accuracy-related penalty under section 6662, the term
"negligence" also includes any failure to make a reasonable
attempt to comply with the Internal Revenue Code, and the term
"disregard" includes any careless, reckless, or intentional
disregard. Sec. 6662(c). We find the corporate petitioner to be
negligent in its failure to maintain full and accurate records of
its financial transactions during the years at issue. Mr. Sutton
failed to disclose fully to Ms. Stroud the information she needed
to keep proper records and file accurate returns. Reliance on
her was not reasonable. Ma-Tran Corp. v. Commissioner, 70 T.C.
9 The additions to tax and penalty are under the following
sections:
TYE Sections
09-30-86 Sec. 6653(a)(1) and (2)
09-30-87 Sec. 6653(a)(1)(A) and (B)
09-30-88 Sec. 6653(a)(1)(A) and (B)
09-30-89 Sec. 6653(a)(1)
09-30-90 Sec. 6662(a)
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