Albert J. Henry - Page 19

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          rules and regulations.  Section 6653(a)(2) provides for an                  
          addition to tax equal to 50 percent of the interest payable under           
          section 6601 on that portion of the underpayment in tax                     
          attributable to such negligence or intentional disregard.                   
               Negligence is defined as the failure to exercise the due               
          care that a reasonable and ordinarily prudent person would employ           
          under the circumstances.  Zmuda v. Commissioner, 731 F.2d 1417,             
          1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982); Niedringhaus v.             
          Commissioner, 99 T.C. 202, 221 (1992); 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).  We also consider the                
          taxpayer's experience and knowledge in determining whether he               
          acted negligently or intentionally disregarded rules and                    
          regulations.  Vandeyacht v. Commissioner, T.C. Memo. 1994-148;              
          DeRochemont v. Commissioner, T.C. Memo. 1991-600.                           
               A taxpayer may avoid liability for the additions to tax                
          under section 6653(a)(1) and (2) by relying on competent                    
          professional advice if it was reasonable to rely on such advice.            
          United States v. Boyle, 469 U.S. 241, 250-251 (1985); Freytag v.            
          Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011, 1017            
          (5th Cir. 1990), affd. 501 U.S. 868 (1991).  Reliance on                    
          professional advice, standing alone, is not an absolute defense             



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