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(2) increase in income in the amount of $1,282 because of a State
and local income tax refund, and (3) partial disallowance in the
amount of $858 of a mortgage interest deduction. Respondent
concedes on brief (1) that the income for 1986 resulting from the
State and local income tax refund that petitioner received during
that year should be $1,187, and not $1,282 as determined in the
notice, and (2) that during 1986 petitioner paid mortgage inter-
est of $19,800, and not $17,862 as determined in the notice. In
light of the foregoing concessions of respondent, the underpay-
ment for 1986 on which the additions to tax under section
6653(a)(1)(A) and (B) may be imposed may be eliminated entirely.
In the event that that underpayment is not eliminated,
section 6653(a)(1)(A) generally imposes an addition to tax equal
to five percent of the entire underpayment if any part of it was
due to negligence or disregard of rules or regulations. Section
6653(a)(1)(B) imposes a further addition to tax in an amount
equal to 50 percent of the interest payable with respect to the
portion of the underpayment that is attributable to negligence or
disregard of rules or regulations.12 For purposes of section
6653(a)(1), the term "negligence" includes any failure to make a
reasonable attempt to comply with the provisions of the Code, and
the term "disregard" includes any careless, reckless, or inten-
12 For purposes of sec. 6653(a)(1)(A) and (B), the underpayment
otherwise determined shall be reduced by any portion of such
underpayment that is attributable to fraud with respect to which
an addition to tax under sec. 6653(b) is imposed.
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Last modified: May 25, 2011