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tax attributable to one or more of the items set forth in section
6662(b). In the notice of deficiency, respondent based the
determination of the section 6662(a) penalty on petitioners’
underpayment's being due to negligence or disregard of rules or
regulations. See sec. 6662(b)(1).
The accuracy-related penalty does not apply with respect to
any portion of an underpayment if it is shown that there was
reasonable cause for such portion of an underpayment and that
petitioners acted in good faith with respect to such portion.
Sec. 6664(c)(1). The determination of whether petitioners acted
with reasonable cause and in good faith depends upon the
pertinent facts and circumstances. Sec. 1.6664-4(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. Leuhsler v. Commissioner, 963 F.2d 907, 910
(6th Cir. 1992), affg. T.C. Memo. 1991-179; Neely v.
Commissioner, 85 T.C. 934, 947-948 (1985). The term "disregard"
includes any careless, reckless, or intentional disregard. Secs.
6653(a)(3), 6662(c). Petitioners bear the burden of proving that
respondent’s determinations are erroneous. Rule 142(a); Bixby v.
Commissioner, 58 T.C. 757, 791 (1972).
Petitioners had an underpayment of tax in 1988 and 1989
because they understated their income due to claiming
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Last modified: May 25, 2011