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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 Spears v. Commissioner, T.C. Memo. 1996-
341 with Zidanich v. Commissioner, T.C. Memo. 1995-382.
Petitioners maintain that they were reasonable in claiming a
loss deduction and investment tax and business energy credits
with respect to Resource. Petitioner argues that he reasonably
relied upon the offering memorandum as well as Marcus and Hefter
as qualified advisers on this matter.
1. The Private Offering Memorandum
Petitioner contends that he "carefully reviewed" and relied
upon the Resource offering memorandum, particularly the reports
of F & G Corp.'s evaluators and the tax opinion appended to the
offering memorandum. However, in view of petitioner's failure to
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