- 40 -                                         
             Penalty for Negligence or Disregard of Rules or Regulations              
                  Because we find that petitioners are not liable for                 
             the fraud penalty under section 6663(a), we must consider                
             whether they are liable for the accuracy-related penalty                 
             under section 6662(a) for 1992, 1993, and 1994, which                    
             respondent determined as an alternative to fraud.  Section               
             6662 imposes a penalty equal to 20 percent of any portion                
             of an underpayment of tax that is attributable to                        
             negligence or disregard of rules or regulations.  See sec.               
             6662(a) and (b).  The term “negligence” is defined as “any               
             failure to make a reasonable attempt to comply with the                  
             provisions of [title 26 of the United States Code]”.  Sec.               
             6662(c).  This includes any failure to exercise due care or              
             to do what a reasonable and ordinarily prudent person would              
             do under the circumstances.  See Rybak v. Commissioner, 91               
             T.C. 524, 565 (1988); Neely v. Commissioner, 85 T.C. 934,                
             947 (1985).  The term “disregard” includes any careless,                 
             reckless, or intentional disregard.  Sec. 6662(c).                       
             Petitioners bear the burden of proving that respondent’s                 
             determination of negligence is erroneous.  See Rule 142(a);              
             Luman v. Commissioner, 79 T.C. 846, 860-861 (1982).                      
Page:  Previous   22   23   24   25   26   27   28   29   30   31   32   33   34   35   36   37   38   39   40   41   NextLast modified: May 25, 2011