- 15 - Respondent also determined that petitioners are liable for additions to tax under section 6653(a)(1)(A) and (B). This Court has defined negligence as a lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances. McGee v. Commissioner, 979 F.2d 66, 71 (5th Cir. 1992), affg. T.C. Memo. 1991-510; Neely v. Commissioner, 85 T.C. 934, 947 (1985). Respondent made numerous adjustments to petitioners' income and deductions for 1987. Petitioners have not presented any evidence either at trial or on brief to convince us that their omissions from gross income and excess deductions were not the result of negligence. Therefore, we sustain respondent's determination. Additions to Tax for Substantial Understatement of Income Tax The final issue for decision is whether petitioners are liable for additions to tax under section 6661. Section 6661(a) provides for an addition to tax equal to 25 percent of the amount of any underpayment attributable to a substantial understatement of income tax. Pallottini v. Commissioner, 90 T.C. 498, 503 (1988). An understatement is substantial if it exceeds the greater of 10 percent of the tax required to be shown on the return or $5,000. Sec. 6661(b)(1)(A). However, the amount of the understatement may be reduced under section 6661(b)(2)(B) for amounts adequately disclosed or supported by substantial authority. Petitioners have not addressed this issue on brief,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
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