Norman H. Fawson and Mary Jane B. Fawson - Page 6




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          petitioners’ underpayment was due to negligence.  Petitioners,              
          therefore, have the burden of proving they were not negligent in            
          deducting their share of the partnership’s losses.  See Estate of           
          Mason v. Commissioner, 64 T.C. 651, 663 (1975), affd. 566 F.2d 2            
          (6th Cir. 1977); Bixby v. Commissioner, 58 T.C. 757, 791 (1972);            
          Anderson v. Commissioner, T.C. Memo. 1993-607, affd. 62 F.3d 1266           
          (10th Cir. 1995).                                                           
               Negligence is defined as the failure to exercise the due               
          care that a reasonable and ordinarily prudent person would                  
          exercise under like circumstances.  See Anderson v. Commissioner,           
          62 F.3d 1266, 1271 (10th Cir. 1995), affg. T.C. Memo. 1993-607;             
          Neely v. Commissioner, 85 T.C. 934, 947 (1985); Glassley v.                 
          Commissioner, T.C. Memo. 1996-206.  The focus of our inquiry is             
          on the reasonableness of the taxpayer’s actions in light of his             
          experience and the nature of the investment.  See Henry Schwartz            
          Corp. v. Commissioner, 60 T.C. 728, 740 (1973); Greene v.                   
          Commissioner, T.C. Memo. 1998-101, affd. without published                  
          opinion 187 F.3d 629 (4th Cir. 1999); Glassley v. Commissioner,             
          supra; Turner v. Commissioner, T.C. Memo. 1995-363.  Whether a              
          taxpayer is negligent in claiming a tax deduction “depends upon             
          both the legitimacy of the underlying investment, and due care in           
          the claiming of the deduction.”  Sacks v. Commissioner, 82 F.3d             


               2(...continued)                                                        
          contend that their examination commenced after July 22, 1998, or            
          that sec. 7491 is applicable to them.                                       





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