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1992, respectively, must be included in Mr. and Mrs. Thorpe's
income for the years in issue. Respondent also determined that
$1,150 paid to Eugene Thorpe in 1990 must be included in Mr. and
Mrs. Thorpe's income. Petitioners offered no evidence at trial
either to prove that these amounts were in fact included in
income or to justify their failure to include the amounts in
income. Moreover, petitioners did not argue on brief that such
amounts were excludable from gross income. We, therefore,
sustain respondent's determination.
Accuracy-related Penalty
Respondent determined that ETCO and Mr. and Mrs. Thorpe are
liable for accuracy-related penalties under section 6662.
Section 6662(a) imposes a penalty in an amount equal to 20
percent of the portion of the underpayment of tax attributable to
one or more of the items set forth in section 6662(b).
Respondent asserts that the entire amount of each underpayment in
issue was due to petitioners' negligence or disregard of rules or
regulations. Sec. 6662(b)(1).
Negligence has been defined as the failure to do what a
reasonable and ordinarily prudent person would do under the
circumstances. Neely v. Commissioner, 85 T.C. 934, 947 (1985).
Respondent's determinations are presumed correct, and petitioners
bear the burden of proving otherwise. Rule 142(a); Luman v.
Commissioner, 79 T.C. 846, 860-861 (1982). Reasonable reliance
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