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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
they approached their investment. McPike v. Commissioner, T.C.
Memo. 1996-46. Compare, e.g., Spears v. Commissioner, T.C. Memo.
1996-341, with Zidanich v. Commissioner, T.C. Memo. 1995-382.
When petitioners invested in the partnerships, they had no
education or experience in plastics materials or plastics
recycling, nor had any of them seen a Sentinel EPE recycler. In
each of these consolidated cases, petitioners maintain that they
were reasonable in claiming deductions and investment credits
with respect to their investments in the Partnerships. In
support of such contentions, petitioners argue, in general terms:
(1) That claiming the deductions and credits with respect to the
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