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Negligence has been defined as "a lack of due care or a
failure to do what a reasonable person would do under the
circumstances." Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th
Cir. 1992), affg. T.C. Memo. 1991-179. Respondent's
determination of negligence is presumed to be correct, and the
taxpayer has the burden of proving that the determination is
erroneous. Rule 142(a). Therefore, petitioners must prove that
they were not negligent, i.e., that they made a reasonable
attempt to comply with the provisions of the Internal Revenue
Code, and that they were not careless, reckless, or in
intentional disregard of rules or regulations. Sec. 6662(c);
sec. 1.6662-3(b), Income Tax Regs.
We sustain respondent's determination. In determining
whether petitioners were negligent in the preparation of their
returns, we take into account petitioner Mr. Smith's business
experience. Glenn v. Commissioner, supra. Additionally, the
size of the tax losses claimed by petitioners in relation to the
revenue earned from the dog-breeding and showing activity
combined with the substantial enjoyment that petitioners derived
from the activity created a situation that was "too good to be
true" within the meaning of section 1.6662-3(b)(1)(ii), Income
Tax Regs. Accordingly, petitioners are liable for the section
6662(a) penalties.
A different result must be reached with respect to the
section 6662(a) penalties that respondent sought by way of an
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