James H. Upchurch - Page 9

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          petitioner bears the burden of proof with respect to the                      
          additions to tax under section 6653(a) and the increased interest             
          under section 6621(c).  Rule 142(a); Luman v. Commissioner, 79                
          T.C. 846, 860-861 (1982).  Respondent raised the section 6661                 
          addition to tax by affirmative allegation in the answer and,                  
          accordingly, bears the burden of proof with respect to that item.             
          Rule 142(a); Vecchio v. Commissioner, 103 T.C. 170, 196 (1994).               
               For 1980, section 6653(a), and for the 1981 through 1983 tax             
          years, section 6653(a)(1) 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.  Section 6653(a)(2) for 1981, 1982, and 1983 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                           
          sophistication of the taxpayers, as well as the manner in which               




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