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“Negligence” is statutorily defined as “any failure to make
a reasonable attempt to comply with the provisions of [the
internal revenue laws]”. Sec. 6662(c). “[D]isregard” is defined
as “any careless, reckless or intentional disregard” of rules or
regulations. Id.
Petitioner contends that he was not required to report the
income for the 1989 through 1992 tax years because it was
constructively received during 1985. We note that, although
petitioner contends that the income in question should have been
reported for 1985, he has admitted that he fraudulently concealed
his espionage income and intentionally did not report it on his
1985 return.8 Petitioner’s conduct was not driven by his attempt
at compliance with the internal revenue laws; rather his entire
pattern of activity reflects his goal of concealment of income.
Petitioner, in that same vein, made the novel argument that
his failure to report his unlawful income was due to fraud, not
negligence, and that the fraud and negligence penalties are
mutually exclusive.9 To the extent that petitioner may not be
found liable for both the fraud and the negligence penalties,
8 Petitioner characterized as fraudulent his failure to
report the receipts that he contends were constructively received
during 1985.
9 Respondent determined the negligence penalty for each of
petitioner’s taxable years in the notice of deficiency.
Respondent’s motion to amend the answer shortly before trial to
allege civil fraud was denied.
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