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the legal expenses attributable to the criminal action are not
deductible. United States v. Gilmore, supra at 49.
Accordingly, we hold that the payments made by petitioner
are not deductible as business or profit-seeking expenses.
3. The Accuracy-Related Penalty
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the portion of the underpayment to which section
6662 applies. Section 6662 applies to that portion of the
underpayment attributable to negligence or disregard of rules or
regulations. Sec. 6662(b)(1). The term "negligence" 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).
Negligence is defined as a lack of due care or the failure to do
what a reasonably prudent person would do under the
circumstances. Neely v. Commissioner, 85 T.C. 934, 947 (1985).
We find that petitioner was negligent for both years.
Petitioner conceded at trial that he was not entitled to some of
the deductions he claimed on his income tax returns. Petitioner
argued that he supplied all of his income tax information to a
"friend" who used this information to prepare petitioner's 1989
and 1990 returns. In addition, petitioner argued that some of
the deductions claimed were not derived from the information
provided to his friend.
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