- 18 -
section 6653(a) for 1980 and 6653(a)(1) and (2) for 1981. Each
of petitioners has 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) for 1980 and section 6653(a)(1) for 1981
impose 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. In cases
involving negligence for 1981, an additional amount is added to
the tax under section 6653(a)(2); such amount is equal to 50
percent of the interest payable with respect to the portion of
the underpayment attributable to negligence. 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).
Petitioners in these consolidated cases contend that they
were reasonable in claiming deductions and credits with respect
to the Partnerships. Petitioners each allege that they
reasonably relied upon the advice of qualified advisers, and that
they reasonably expected an economic profit in light of the so-
called oil crisis in the United States during 1981. In each
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011