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merely by designating his business income as "trust" income he
would not have to report it. Petitioner did not file a trust
return, nor did either petitioner consult an accountant or an
attorney to determine whether the $183,585 should be reported.
In short, petitioners did not do what a reasonable and ordinarily
prudent person would do under the circumstances. Neely v.
Commissioner, 85 T.C. 934, 947 (1985). Moreover, though
instructed on line 12 of Form 1040 to do so, petitioners did not
file a Schedule C, even as to the business income of $16,147
which they did report. We find that petitioners are liable for
the negligence penalty.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011