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and shipper. Both of these cases represent exceptions to the
general rule that payments made by a shareholder on behalf of a
corporation are capital contributions by the shareholder, and not
deductible expenses. Deputy v. du Pont, supra.
Petitioner fails to qualify for the exception discussed in
Jenkins and Lutz for two reasons. First, unlike Jenkins and
Lutz, petitioner's obligation to make these payments arose
primarily because of his desire to protect his investment in
TIC/Multilogic, not to protect his business reputation as an
attorney. In addition, petitioner has presented no evidence that
his business reputation as an attorney would have been adversely
affected by his failure to hire Mr. Miller to investigate the
computer program, or by his failure to obtain releases from the
various leases. Accordingly, petitioner is not entitled to
deduct these payments as a section 162 expense.
In conclusion, petitioner is not entitled to claim as an
ordinary loss the advances lost in the business venture with Mr.
Kelley and TIC/Multilogic.
V. Section 6662--Imposition of Accuracy-Related Penalty
Respondent determined that petitioner's underpayment of tax
was due to negligence or disregard of rules or regulations under
section 6662. Section 6662(a) and (b)(1) imposes an accuracy-
related penalty equal to 20 percent of the portion of the
underpayment that is attributable to negligence or disregard of
rules or regulations.
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