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to negligence or disregard of rules or regulations. See sec.
6662(b)(1). Negligence is the “‘lack of due care or failure to
do what a reasonable and ordinarily prudent person would do under
the circumstances’”. Neely v. Commissioner, 85 T.C. 934, 947
(1985) (quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th
Cir. 1967), affg. 43 T.C. 168 (1964) and T.C. Memo. 1964-299).
It includes any failure by the taxpayer to keep adequate books
and records or to substantiate items properly. See sec. 1.6662-
3(b)(1), Income Tax Regs. The term “disregard” includes any
careless, reckless, or intentional disregard. Sec. 6662(c). No
penalty shall be imposed if it is shown that there was reasonable
cause for the underpayment and the taxpayer acted in good faith
with respect to the underpayment. See sec. 6664(c).
At trial, petitioner failed to establish that she acted in
good faith with respect to the underpayments during the years in
issue. Petitioner claimed excessive Schedule C expenses which
she was unable to substantiate and disregarded the requirements
of sections 162 and 274. In the Court’s opinion, neither the
receipts submitted by petitioner nor her testimony established a
business purpose for the claimed expenses. On the basis of the
record, we hold that petitioner is liable for the accuracy-
related penalties under section 6662(a) for 1991, 1992, and 1993.
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