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petitioners' control. We conclude that petitioners had a good
faith intent to make a profit from their horse and rodeo
activity.
D. Whether Petitioners Are Liable for the Penalty Under Section
6662 for Negligence
Respondent determined that petitioners are liable for the
accuracy-related penalty for negligence for 1991 and 1992 under
section 6662. Taxpayers are liable for a penalty equal to 20
percent of the part of the underpayment to which section 6662
applies. Sec. 6662(a). Negligence includes a failure to make a
reasonable attempt to comply with internal revenue laws or to
exercise ordinary and reasonable care in preparing a tax return.
Sec. 6662(c). The accuracy-related penalty does not apply to any
part of an underpayment to the extent the taxpayer shows that he
or she had reasonable cause and acted in good faith. Sec.
6664(c)(1).
Respondent's agents did not question whether petitioners had
a profit objective in conducting their antique activity when they
audited petitioners for 1988. Respondent's failure to raise this
issue for 1988 does not help them avoid liability for the
accuracy-related penalty for 1991 and 1992.
Petitioners deducted a substantial amount of losses during
the extended time from when they realized that the antique
activity could never be profitable. We conclude that petitioners
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