- 6 - On May 7, 1995, respondent issued a notice of deficiency in which he determined that petitioner was liable for additions to tax for negligence or intentional disregard of rules or regulations under section 6653(a)(1) and (2) and for substantial understatement of tax under section 6661(a) with respect to his 1983 taxable year. OPINION Negligence It is respondent's position that petitioner was negligent in claiming a loss and investment tax credit from his investment in Ridge Energy.2 Petitioner claims that he is not liable for the additions to tax for negligence because he reasonably relied on Mr. Coscia's advice when he invested in Ridge Energy and when he claimed a loss and credit with respect to the same. To support his contention that his reliance was reasonably based, petitioner points to his age and limited investment experience and to the fact that Mr. Coscia had been his accountant for 4 years at the time of his investment. Section 6653(a)(1) imposes an addition to tax equal to 5 percent of any underpayment of tax if any part of the underpayment is due to negligence. In addition, section 6653(a)(2) adds to the tax an amount equal to 50 percent of the 2 Respondent does not argue that petitioner is liable for the additions to tax under sec. 6653(a) due to intentional disregard of rules or regulations.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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