-31-
Negligence is defined as the failure to exercise the due care
that a reasonable, prudent person would exercise under similar
circumstances. Zmuda v. Commissioner, 731 F.2d 1417, 1422 (9th
Cir. 1984), affg. 79 T.C. 714 (1982); Neely v. Commissioner, 85
T.C. 934, 947 (1985). A taxpayer has the burden of proving that
respondent's determination is in error. Luman v. Commissioner, 79
T.C. 846, 860-861 (1982).
We are satisfied, and thus find, that the entire underpayment
is due to Ms. Ng's negligence and intentional disregard of the
Federal income tax rules and regulations. Ms. Ng failed to
maintain adequate records. She commingled her personal funds with
funds of entities she controlled. She misrepresented material
facts to the revenue agent on more than one occasion. She
concealed large amounts of taxable income on which she did not pay
tax. She concealed ownership of property. We therefore hold that
Ms. Ng is liable for the additions to tax for negligence on the
entire underpayment for each of the years 1986 through 1988, and
for the accuracy-related penalty on the entire underpayment for
1989, excluding the amount by which any of the underpayments is to
be reduced in accordance with our findings herein.
Section 6651(a)(1) provides for a 5-percent addition to tax
for each month a return is not filed, unless due to reasonable
cause, with a maximum addition to tax of 25 percent. Because Ms.
Ng did not timely file her returns, section 6651(a)(1) applies to
each of the years under consideration.
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