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experiencing. A taxpayer’s poor financial status, however, is
not reasonable cause within the meaning of section 6651. See
Tabbi v. Commissioner, T.C. Memo. 1995-463. To the extent that
there remains a deficiency for each year after taking into
account the Schedule C deductions allowed above, respondent’s
imposition of the section 6651(a)(1) addition to tax for each
year is sustained.
C. Negligence Penalty
In the notice of deficiency, respondent also determined that
the underpayment of tax required to be shown on petitioners’
return for each year in issue is due to petitioners’ negligence,
and imposed a penalty under section 6662(a). See sec. 6662(b)(1)
and (c). Section 6662(a) provides for a penalty in an amount
equal to 20 percent of the portion of the underpayment of tax
attributable to negligence or intentional disregard of rules or
regulations.
Negligence includes “any failure to make a reasonable
attempt to comply with the provisions” of the internal revenue
laws or to exercise that level of care exhibited by a reasonable
person under the same or similar circumstances. Sec. 6662(c);
Neely v. Commissioner, 85 T.C. 934, 947 (1985); sec. 1.6662-
3(b)(1), Income Tax Regs. Disregard includes “any careless,
reckless, or intentional disregard.” Sec. 6662(c).
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Last modified: May 25, 2011