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Section 6653(a)(1) and (2) imposes additions to tax if any
part of the underpayment of tax is due to negligence or
intentional disregard of rules or regulations. Negligence is
defined as the failure to exercise the due care that a reasonable
and ordinarily prudent person would exercise under the
circumstances. See Neely v. Commissioner, 85 T.C. 934, 947
(1985). The pertinent question is whether a particular
taxpayer's actions are reasonable in light of the taxpayer's
experience, the nature of the investment, and the taxpayer's
actions in connection with the transactions. See Henry Schwartz
Corp. v. Commissioner, 60 T.C. 728, 740 (1973). In this regard,
the determination of negligence is highly factual. "When
considering the negligence addition, we evaluate the particular
facts of each case, judging the relative sophistication of the
taxpayers as well as the manner in which the taxpayers approached
their investment." Turner v. Commissioner, T.C. Memo. 1995-363.
Petitioner has the burden of proving error in respondent's
determination of the additions to tax for negligence. See Rule
142(a); Luman v. Commissioner, 79 T.C. 846, 860-861 (1982); Bixby
v. Commissioner, 58 T.C. 757, 791-792 (1972).
A. Independent Investigation
Petitioner's first contention is that he was not negligent
because he made a thorough independent investigation before he
invested in Plymouth and Taylor. Petitioner asserts that his
knowledge of certain marketing principles led him to conclude
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