Don L. and Lora Christensen - Page 7




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          otherwise.  Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115              
          (1933); cf. sec. 7491(c).7  Respondent determined that                      
          petitioners’ underpayments were due to negligence.  Petitioners,            
          therefore, have the burden of proving they were not negligent in            
          deducting their share of the partnership’s losses.  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.  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 inquiry is                 
          on the reasonableness of the taxpayer’s actions in light of his             
          experience and the nature of the investment.  Henry Schwartz                
          Corp. v. Commissioner, 60 T.C. 728, 740 (1973); Greene v.                   



               7    The Internal Revenue Service Restructuring & Reform Act           
          of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 726, added                   
          sec. 7491(c), which places the burden of production on 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 contend, nor is there evidence, that their examination                  
          commenced after July 22, 1998, or that sec. 7491 is applicable in           
          this case.                                                                  





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