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understand the questions asked by respondent's counsel on cross-
examination. Nonetheless, he was candid, not evasive.
Considering the totality of the facts and circumstances
contained in this record, we conclude that respondent has not
carried the heavy burden of proving fraud by clear and convincing
evidence. Consequently, we hold for Mr. Ortiz on this issue.
Issue 7. Accuracy-Related Penalties
The Court is satisfied, based on this record, that
respondent's alternative determination that petitioners are
liable for the accuracy-related penalties under section 6662 for
both years should be sustained. Section 6662(a) provides
generally for a penalty of 20 percent of the portion of an
underpayment to which the section applies.
Section 6662(b) lists five categories in which an
underpayment of tax will be subjected to the penalty, including
negligence. "Negligence" includes any failure to make a
reasonable attempt to comply with the Internal Revenue Code.
Sec. 6662(c). Petitioners underreported their income for the
years in issue. In short, they did not do what a reasonable and
ordinary prudent person would do under the circumstances. Neely
v. Commissioner, 85 T.C. 934, 947 (1985). Petitioners presented
no evidence to show that their underpayments were due to
reasonable cause and that they acted in good faith with respect
to such underpayments. Sec. 6664(c).
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