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partnership loss that petitioners had not eliminated on the
amended return. The assessment reflected a total tax liability
for 1983, in respect of partnership items relating to Mid
Continent, of $23,194 less the $18,194 that petitioners had
previously designated as tax and remitted with their amended
return.
On December 29, 1993, and February 9, 1994, respondent
mailed notices of deficiency to petitioners in which there were
determined additions to tax for negligence under section
6653(a)(1) and (2) for the taxable years 1983 and 1984,
respectively. The additions to tax are affected items in that
they are based on tax owing by petitioners as a result of
adjustments to partnership items appearing on Mid Continent’s
partnership returns for 1983 and 1984.
OPINION
Petitioners argue that they are not subject to the additions
to tax for negligence because: (1) The Internal Revenue Code
should not punish negligent investing, only negligence in
reporting tax obligations; (2) they, unsophisticated investors,
relied in good faith upon the advice of a competent, independent
professional on an investment activity known to be risky; and (3)
if they are found to have been negligent, the payment of tax with
the amended return for 1983 eliminates or reduces the 1983 year
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