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operated it during the years in issue, had been, or would ever
be, profitable.
C. Negligence
Section 6662(a) provides that, if the section applies, there
is imposed a penalty in an amount equal to 20 percent of the
portion of the underpayment. The penalty applies, inter alia, to
an underpayment due to negligence or disregard of the rules or
regulations. See sec. 6662(b)(1). The term “disregard” includes
“any careless, reckless, or intentional disregard.” Sec.
6662(c). Negligence includes “any failure to make a reasonable
attempt to comply” and also includes any failure by the taxpayer
to keep adequate books and records or to substantiate items
properly. Id.; sec. 1.6662-3(b)(1), Income Tax Regs.
While petitioner’s returns appear to have been prepared by a
professional tax return preparing organization, the information
was derived from petitioner. We are quite convinced that
petitioner was not very candid with the return preparer. We
point to petitioner’s claim of a deduction on his Schedule C for
his rent while employed in Alexandria, his total lack of adequate
books and records concerning the Schedule C activity, and his
total unawareness of the details of his claims of dependents.
This is nothing more that a careless, reckless, and intentional
disregard of the rules and regulations. Respondent’s
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