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Section 6662(a)
The last issue for decision is whether petitioner is liable
for a penalty pursuant to section 6662(a). Section 6662(a)
imposes a penalty of 20 percent of the portion of the
underpayment which is attributable to negligence or disregard of
rules or regulations. See sec. 6662(b)(1). Negligence is the
lack of due care or failure to do what a reasonable and
ordinarily prudent person would do under the circumstances. See
Neely v. Commissioner, 85 T.C. 934, 947 (1985). The term
"disregard" includes any careless, reckless, or intentional
disregard. Sec. 6662(c). No penalty shall be imposed if it is
shown that there was reasonable cause for the underpayment and
the taxpayer acted in good faith with respect to the
underpayment. See sec. 6664(c).
At trial, petitioner failed to establish that he acted in
good faith with respect to his 1995 underpayment. Petitioner
failed to comply with section 183 and disregarded rules and
regulations by deducting excessive losses for the 1995 tax year.
On the basis of the record, we hold that petitioner is liable for
the accuracy-related penalty under section 6662(a).
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011