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to reflect the disallowed credit.11 Since respondent seeks to
increase the amount of deficiency, respondent has the burden of
proof to establish that petitioners are not entitled to the
investment tax credit. See Rule 142. Respondent failed to
present evidence at trial as to this issue and is deemed to have
conceded the issue. See Rules 142(a), 149(b); Pearson v.
Commissioner, T.C. Memo. 2000-160.
F. Accuracy-Related Penalty
Respondent determined petitioners are liable for the
accuracy-related penalty under section 6662(a) for 1990, 1991,
and 1993. The accuracy-related penalty is equal to 20 percent of
any portion of an underpayment of tax required to be shown on the
return that is attributable to the taxpayer’s negligence or
disregard of rules or regulations. See sec. 6662(a) and (b)(1).
“Negligence” consists of any failure to make a reasonable attempt
to comply with the provisions of the Internal Revenue Code and
also includes any failure to keep adequate books and records or
to substantiate items properly. See sec. 6662(c); 1.6662-
3(b)(1), Income Tax Regs. “Disregard” consists of any careless,
reckless, or intentional disregard. See sec. 6662(c).
An exception applies to the accuracy-related penalty when
the taxpayer demonstrates (1) there was reasonable cause for the
11 We note that respondent’s calculation appears to be
incorrect, as petitioners claimed a credit of $3,151 on their
1993 Federal income tax return.
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