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Negligence includes any careless, reckless, or intentional
disregard of rules and regulations, any failure to make a
reasonable attempt to comply with the provisions of the law, and
any failure to exercise ordinary and reasonable care in the
preparation of a tax return. Zmuda v. Commissioner, 731 F.2d
1417, 1422 (9th Cir. 1984), affg. 79 T.C. 714 (1982). To prevail
on the issue of negligence, petitioners must prove that their
actions in connection with this transaction were reasonable in
light of their experience and business sophistication. Hoffpauir
v. Commissioner, T.C. Memo. 1996-41; Avellini v. Commissioner,
T.C. Memo. 1995-489. If a taxpayer acts in good faith and with
reasonable cause, he or she will not be liable for the addition
to tax for negligence. Sec. 6664(c); see Collins v.
Commissioner, 857 F.2d 1383, 1386 (9th Cir. 1988), affg. Dister
v. Commissioner, T.C. Memo. 1987-217.
Respondent asserted accuracy-related penalties based on all
the adjustments made in the notice of deficiency. Petitioners
have conceded the penalty as to all adjustments, with the
exception of the adjustment to the casualty loss.4 Petitioners
have no tax or accounting backgrounds. We also note that
petitioners' property did sustain extensive damage. Petitioners’
return was prepared by their accountant, upon whom they relied.
4 Since petitioners have failed to address the accuracy-
related penalty with respect to the other adjustments, we treat
this as a concession by petitioners and find for respondent.
Theodore v. Commissioner, 38 T.C. 1011, 1041 (1962).
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