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his failure to file was not due to reasonable cause because he
continued to perform his daily business operations). We conclude
that petitioners' failure to file timely was due to willful
neglect and not reasonable cause, and they are therefore liable
for the addition to tax under section 6651.
B. Whether Petitioners Are Liable for the Accuracy-Related
Penalty for Negligence for 1994 and 1995
Taxpayers are liable for a penalty equal to 20 percent
of the part of the underpayment attributable to negligence or
disregard of rules or regulations. See sec. 6662(a) and (b)(1).
Negligence includes failure to make a reasonable attempt to
comply with the provisions of the internal revenue laws or to
exercise ordinary and reasonable care in the preparation of a
tax return. See sec. 6662(c).
Petitioners contend that they are not liable for the
negligence penalty because two of the adjustments made by
respondent, that is, the cancellation of indebtedness and
Schedule C bad debt issues, were technical in nature.
Petitioners contend that petitioner’s errors on their returns
were due to reasonable cause and not negligence because he was
preoccupied with his mother’s and daughter’s health problems and
his business travel. Petitioners also contend that respondent’s
use of the bank deposit method to determine petitioner’s business
gross receipts was not an accurate way to determine income.
Finally, petitioners contend that the fact that petitioner did
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