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consequences of doing so. Petitioner chose to employ the
corporate form, and “having elected to do some business as a
corporation, he must accept the tax disadvantages.” Higgins v.
Smith, 308 U.S. 473, 477-478 (1940). He also chose to obtain the
use of boats for his business through a leasing transaction, and
while a taxpayer is free to organize his affairs as he
chooses, nevertheless, once having done so, he must
accept the tax consequences of his choice, whether
contemplated or not and may not enjoy the benefit of
some other route he might have chosen to follow but did
not. * * * [Commissioner v. National Alfalfa
Dehydrating & Milling Co., 417 U.S. 134, 149 (1974);
citations omitted.]
We hold that petitioner is liable for the deficiencies
determined by respondent7 and cannot exclude the boat lease
income from his individual returns.
We must additionally decide whether petitioner is liable for
accuracy-related penalties under section 6662(a) and (b)(1) for
each of the years at issue. These sections provide that if any
portion of an underpayment of tax is attributable to negligence
or disregard of rules or regulations, there shall be added to the
tax an amount equal to 20 percent of the underpayment which is so
attributable. The term “negligence” includes any failure to make
a reasonable attempt to comply with the statute, and the term
7 It appears, however, that respondent may have disallowed a
greater amount than was actually deducted as boat rental expense
on the corporation’s return for its taxable year ended May 31,
1992. We expect the parties to address this matter in their Rule
155 computations.
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