19
Star agreed to purchase the chlor-alkali system from Eltech,
Murphy reviewed financial projections prepared by Micro-Bio.
Based on this information, Murphy concluded that the purchase of
the chlor-alkali system was a sound investment for Lone Star.
Technical problems after installation sapped the chlor-alkali
system of its profit potential. We find section 6621(c)
inapplicable under these circumstances.
2. Additions to Tax for Negligence
Respondent determined that Sands is liable for additions to
tax for negligence under section 6653(a)(1) and (2) for the
taxable years 1984 and 1985 and section 6653(a)(1)(A) and (B) for
the taxable year 1986. Section 6653(a)(1) imposes an addition to
tax equal to 5 percent of the underpayment of tax if any part of
the underpayment is due to negligence or intentional disregard of
rules or regulations. Section 6653(a)(2) imposes an addition to
tax equal to 50 percent of the interest payable on the portion of
the underpayment that is attributable to negligence. For 1986,
section 6653(a)(1)(A) imposes an addition to tax equal to 5
percent of the underpayment if any part of the underpayment is
attributable to negligence, and section 6653(a)(1)(B) imposes an
addition to tax equal to 50 percent of the interest payable on
the portion of the underpayment that is attributable to
negligence.
Negligence is defined as the lack of due care or the failure
to do what a prudent person would do under the circumstances.
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