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Additions to Tax for Negligence and Accuracy-related Penalty
Respondent determined that all petitioners in these cases
are liable for additions to tax or accuracy-related penalties for
negligence for the years in which they had underpayments.
Different sections apply to the various years in issue. Secs.
6653(a)(1)(A) and (B) (for 1986 and 1987), 6653(a)(1) (for 1988),
6662(a) (for 1989 and 1990). Negligence is defined as a lack of
due care or failure to do what a reasonable and ordinarily
prudent person would do under the circumstances. Neely v.
Commissioner, 85 T.C. 934, 947-948 (1985). Petitioners bear the
burden of proving that respondent's determinations are erroneous.
Rule 142(a).
The Dickersons claim that they should not be liable for the
negligence penalty because they are entitled to the deductions
they claimed or because their unreported rental income was offset
by expenses. This is essentially arguing that they are not
liable for the negligence penalty because they did not underpay
their tax. We have already found that they did underpay their
tax. Respondent is sustained with respect to the negligence
penalty resulting from underpayments by the Dickersons.
The Michoff, Srs., “admit they unintentionally omitted items
from their tax return due to inadvertence and lack of knowledge”
but contend that they should not be burdened with additions to
tax for negligence or the accuracy-related penalty. The Michoff,
Srs., have failed to offer any proof that they were not negligent
in their underpayment. Respondent is sustained with respect to
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