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did not reasonably rely in good faith on the advice of a
competent expert in reporting their deductions and credits from
Mid Continent on their 1983 and 1984 Federal income tax returns.
For each return petitioners failed to exercise the due care that
a reasonable and ordinarily prudent person would employ under the
circumstances.
The Effect of Petitioners' Amended Return for 1983
In December of 1986, several months after learning that the
Mid Continent partnership return for 1983 would be examined by
respondent, petitioners filed an amended joint individual Federal
income tax return for tax year 1983. Petitioners argue that when
deciding the issue of negligence for 1983, the "entire record",
including the amended return, must be considered. According to
petitioners, since they reported and paid additional tax, there
is no negligent underpayment of tax for 1983; it is vitiated by
the amended return.
If the Court nevertheless determines that the negligence
additions to tax apply, they argue that as to the section
6653(a)(2) addition of 50 percent of the interest due on the
portion of the underpayment that is attributable to negligence,
all of the underpayment was paid with the amended return in 1986.
Any deficiency that remained, petitioners argue, relates to their
deduction of "out-of pocket-expenses" and not to any negligence
on their part. Therefore, they argue that the section 6653(a)(2)
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