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Federal income tax returns were reasonable in light of their
experience and the nature of the investment. See Henry Schwartz
Corp. v. Commissioner, 60 T.C. 728, 740 (1973); Lucas v.
Commissioner, T.C. Memo. 1995-341.
Petitioners, citing Chamberlain v. Commissioner, 66 F.3d 729
(5th Cir. 1995), affg. in part and revg. in part T.C. Memo. 1994-
228, caution the Court to distinguish carefully between
"negligence" in making the underlying investment and the
negligence reached by section 6653(a). We find the correct
standard to be announced in the section itself. If any part of
an underpayment of tax is due to negligence, it is subject to the
additions to tax provided by section 6653(a). See Sacks v
Commissioner, 82 F.3d 918, 920 (9th Cir. 1996) (negligence in
claiming a tax deduction depends upon both the legitimacy of the
underlying investment and due care in claiming the deduction),
affg. T.C. Memo. 1994-217; Novinger v. Commissioner, T.C. Memo.
1991-289; Rogers v. Commissioner, T.C. Memo. 1990-619.
Description of the Underlying Investment
The exact nature of the underlying partnership investment in
this case is not clear directly from the record. Some
partnership documents were introduced into evidence, and the
parties stipulated that the partnership possessed the rights to a
device called the "Terra-Drill", which we discuss below. But no
prospectus or offering memorandum was produced, few facts on the
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