Thomas F. Hale - Page 9




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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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