- 17 -
for tax purposes. Cf. Commissioner v. Sunnen, 333 U.S. 591, 604
(1948); Hutcherson v. Commissioner, T.C. Memo. 1984-165.
In light of our holdings on these issues, we need not reach
respondent’s alternative argument that petitioners should be
taxed on the Hillside Farm income under the grantor trust rules.
Additions to Tax and Penalties
Respondent determined that petitioners are liable for
additions to tax under section 6653(a) for taxable years 1987 and
1988, and an accuracy-related penalty under section 6662 for
taxable year 1989. Section 6653(a)(1)(A) imposes an addition to
tax equal to 5 percent of the underpayment if any part of the
underpayment is attributable to negligence. Section
6653(a)(1)(B) imposes an addition to tax equal to 50 percent of
the interest payable on the portion of the underpayment
attributable to negligence. Section 6662(a) imposes a 20-percent
penalty on any portion of an underpayment that is attributable to
negligence. Negligence is the lack of due care or failure to do
what a reasonable and ordinarily prudent person would do under
the same circumstances. See Neely v. Commissioner, 85 T.C. 934
(1985). Petitioners have the burden of proving that respondent’s
determinations are incorrect. See Rule 142(a); Bixby v.
Commissioner, 58 T.C. 757, 791-792 (1972).
Petitioners argue only that because there is no underpayment
of tax, there is no amount upon which to compute additions to tax
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