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that petitioner's payment of litigation costs related to these
individuals was ordinary and necessary to petitioner's business
or was made by petitioner in connection with the plan. To the
contrary, the only evidence regarding petitioner's motive for
paying the litigation costs is that all claimants lacked the
necessary funds. This motive was not proximately related to the
plan or to petitioner's trade or business, and the expense was
neither ordinary nor necessary. We sustain respondent's
determination to the extent of $61,317.
Respondent determined petitioner is liable for the
accuracy-related penalty under section 6662(a) and (b)(1) for the
year in issue. That section imposes a penalty equal to 20
percent of the portion of an underpayment that is attributable
to, among other things, negligence. Petitioner will avoid this
penalty if the record shows that it was not negligent; i.e., it
made a reasonable attempt to comply with the provisions of the
Internal Revenue Code, and it was not careless, reckless, or in
intentional disregard of rules or regulations. See sec. 6662(c);
Accardo v. Commissioner, 942 F.2d 444, 452 (7th Cir. 1991), affg.
94 T.C. 96 (1990); Drum v. Commissioner, T.C. Memo. 1994-433,
affd. without published opinion 61 F.3d 910 (9th Cir. 1995).
Negligence connotes a lack of due care or a failure to do what a
reasonable and prudent person would do under the circumstances.
See Allen v. Commissioner, 92 T.C. 1 (1989), affd. 925 F.2d 348
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