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disregard of rules or regulations. Negligence is the lack of due
care or failure to do what a reasonable and ordinarily prudent
person would do under the circumstances. See Neely v.
Commissioner, 85 T.C. 934, 947 (1985). It is well established
that the taxpayer bears the burden of proof on this issue. See
Bixby v. Commissioner, 58 T.C. 757, 791 (1972).
In the notice of deficiency, respondent determined a
deficiency based on three adjustments to petitioner's tax return
for 1996. At trial, petitioner conceded one of the adjustments,
and the parties reached a basis of settlement for another
adjustment. Petitioner presented no evidence as to these two
adjustments showing that he had reasonable cause for the
underpayment relating thereto. The other adjustment related to a
claimed capital loss, discussed in detail above. The Court finds
that the underpayment as to this adjustment was also due to a
careless, reckless, or an intentional disregard of rules or
regulations. Respondent, therefore, is sustained on the entire
amount of petitioner's underpayment with respect to the penalty
under section 6662(a).
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011