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3. Schedule A Itemized Deductions
Respondent concedes that petitioner's legal and professional
expenses incurred in connection with Moomuku and petitioner's
general contracting activity, to the extent not deductible on
Schedule C, are allowable as miscellaneous itemized deductions,
subject to a 2-percent adjusted gross income floor for 1991. As
discussed, petitioner's expenses are not fully allowable as
Schedule C deductions.
4. Accuracy-Related Penalty
The notice of deficiency contains a misstatement of the
penalty as section 6651(a)(1) for 1991. Respondent, in a attempt
to correct this error, asserted in the answer that petitioner is
liable for an accuracy-related penalty under section 6662(a).
See Rule 36. Petitioner does not contend that the notice of
deficiency is invalid. Generally, an error on a notice of
deficiency does not render the notice defective. Campbell v.
Commissioner, 90 T.C. 110 (1988). We find petitioner is liable
for an accuracy-related penalty under section 6662(a) based on a
preponderance of the evidence in the record. Accordingly, any
debate about the burden of proof on this matter becomes academic.
The accuracy-related penalty is equal to 20 percent of any
portion of an underpayment attributable to a taxpayer's
negligence or disregard of rules or regulations. Sec. 6662(a)
and (b)(1). The term "negligence" includes any failure to do
what a reasonable and ordinarily prudent person would do under
the same circumstances. Neely v. Commissioner, 85 T.C. 934, 947
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