-15-
not own the stock.
The basis of property acquired through purchase generally is
its cost. Sec. 1012; sec. 1.1012-1(a), Income Tax Regs. There is
nothing about the $19,000 in payments to family members to suggest
that such payments be allocated to the cost basis of the stock.
The $19,000 was paid to family members who had no ownership
interests in the Solectron stock. Accordingly, we hold that the
Solectron stock basis is $10,000, as reported on petitioners' tax
return.
Issue 7. Accuracy-Related Penalty
Respondent determined an accuracy-related penalty under
section 6662(a). Section 6662 imposes a penalty equal to 20
percent of the portion of the underpayment that is attributable to
negligence or disregard of rules or regulations. Sec. 6662(a),
(b)(1).
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).
Petitioners each have graduate college degrees. Mrs. Yei, who
prepared petitioners' 1989 tax return, while not a C.P.A., passed
the written portion of the C.P.A. examination. Mrs. Yei testified
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