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As a result of the partnership’s TEFRA proceeding,
petitioners were assessed a tax liability of $10,195, along with
interest. Respondent issued a notice of deficiency for affected
items determining that petitioners are liable for additions to
tax for negligence pursuant to section 6653(a)(1) and (2) and for
a substantial understatement addition to tax pursuant to section
6661. Petitioners timely filed a petition seeking a
redetermination of the negligence additions to tax.
Discussion
Section 6653(a)(1) imposes an addition to tax in an amount
equal to 5 percent of an underpayment of tax if any part of the
underpayment is due to negligence or intentional disregard of
rules or regulations. Section 6653(a)(2) imposes another
addition to tax in an amount equal to 50 percent of the interest
due on the portion of the underpayment attributable to negligence
or intentional disregard of rules or regulations.
Respondent’s determinations, contained in the notice of
deficiency, are presumed correct, and petitioners must establish
otherwise. See Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933); cf. sec. 7491(c).2 Respondent maintains that
2 The Internal Revenue Service Restructuring & Reform Act
of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 685, 726, added
sec. 7491(c), which shifts the burden of proof to the Secretary
with respect to a taxpayer’s liability for penalties and
additions to tax in court proceedings arising in connection with
examinations commencing after July 22, 1998. Petitioners do not
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