- 33 -
negligence. Accordingly, we hold that petitioner is liable for
the addition to tax under section 6651(a)(1).
V. Accuracy-Related Penalty
Section 6662(a) imposes a penalty equal to 20 percent of the
portion of an underpayment of tax attributable to a taxpayer’s
negligence, disregard of rules or regulations, or substantial
understatement of income tax. See sec. 6662(a), (b)(1) and (2).
“Negligence” has been defined as the failure to do what a
reasonable and ordinarily prudent person would do under the
circumstances. Neely v. Commissioner, 85 T.C. 934, 947 (1985).
The term “disregard” includes any careless, reckless, or
intentional disregard of rules or regulations. Sec. 6662(c). An
understatement is “substantial” if it exceeds the greater of 10
percent of the tax required to be shown on the return or $5,000.
Sec. 6662(d)(1) and (2). Respondent’s determination that
petitioner is negligent is presumptively correct, and the burden
is on petitioner to show a lack of negligence. See Hall v.
Commissioner, 729 F.2d 632, 635 (9th Cir. 1984), affg. T.C. Memo.
1982-337.18 The accuracy-related penalty applies unless
petitioner demonstrates that there was reasonable cause for the
underpayment and that he acted in good faith with respect to the
underpayment. See sec. 6664(c).
18See supra note 10.
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