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executors never intended to distribute, and which inured to the
benefit of the heirs.
Respondent determined that petitioner is liable for the
penalty for negligence or intentional disregard of the rules or
regulations pursuant to section 6662. Petitioner asserts that it
was neither negligent nor intentionally disregarded the rules or
regulations.
Section 6662 provides for the imposition of a penalty equal
to 20 percent of the portion of an underpayment which is
attributable to negligence or disregard of the rules or
regulations. Sec. 6662(a), (b)(1). For purposes of the section,
the term "negligence" includes any failure to make a reasonable
attempt to comply with the Internal Revenue laws, a failure to
exercise ordinary and reasonable care in the preparation of a tax
return, and a failure to keep adequate books and records or to
substantiate items properly. Sec. 1.662-3(b)(1), Income Tax
Regs. 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
(1985). The term "disregard" includes any careless, reckless, or
intentional disregard of the rules or regulations. Sec. 6662(c).
Just as with respondent's determination of deficiency, his
determination of negligence or intentional disregard of the rules
or regulations is prima facie correct with the burden of proof to
the contrary on petitioner. Neely v. Commissioner, supra.
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