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6653(a)(1) for 1988. For 1987, if any part of the underpayment
is due to negligence, the addition to tax is 5 percent of the
underpayment, plus 50 percent of the interest due on the part of
the underpayment that is due to negligence. In this instance,
respondent determined that the entire underpayment was due to
negligence. For 1988, if any part of the underpayment is due to
negligence, the addition to tax is 5 percent of the underpayment.
Negligence is defined as the 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). Petitioners bear the burden of proving that additions to
tax do not apply. Rule 142(a); Luman v. Commissioner, 79 T.C.
846, 860-861 (1982).
Petitioners claimed on their return that substantial amounts
of renovations ($112,470) were part of the cost of the new
residence and thus eligible for section 1034 treatment, knowing
that those renovations had not been begun prior to the 2-year
limit. Compounding their claim, they dated checks to make it
appear that the total amount claimed on their tax return
qualified, knowing that such dates were not correct.
Accordingly, for the 1988 taxable year in which petitioners would
have been required to report any gain which was not rolled over,
they are negligent. In addition, petitioners did not offer any
evidence to show that any portion of any underpayment for 1987
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