Edward E. and Constance M. Thorpe - Page 23

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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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