- 33 -
excess of the amounts allowed by respondent.14 Respondent is
sustained on this issue.
The final issue is whether petitioners are liable for the
accuracy-related penalty under section 6662(a) for negligence or
disregard of rules or regulations for each of the years at issue.
Section 6662(a) provides that, if it is applicable to any portion
of an underpayment in taxes, there shall be added to the tax an
amount equal to 20 percent of the portion of the underpayment to
which section 6662 applies. Section 6662(b)(1) provides that
section 6662 shall apply to any underpayment attributable to
negligence or disregard of rules or regulations.
Section 6662(c) provides that the term "negligence" includes
any failure to make a reasonable attempt to comply with the
provisions of the internal revenue laws, and the term "disregard"
includes any careless, reckless, or intentional 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
14 Some of the claimed deductions were for expenses of
Bellmark. Petitioners are not entitled to deduct such expenses.
Both petitioner and Mr. Bell testified that petitioner was to be
reimbursed by Bellmark for all expenses incurred by him, during
the years at issue, on behalf of Bellmark. It is well
established that a trade or business deduction is not allowable
to the extent that an employee is entitled to reimbursement from
his employer. See Orvis v Commissioner, 788 F.2d 1406, 1408 (9th
Cir. 1986), affg. T.C. Memo. 1984-533; Lucas v. Commissioner, 79
T.C. 1, 7 (1982).
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