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168 (1964) and T.C. Memo. 1964-299). Negligence also includes
any failure by the taxpayer to keep adequate books and records or
to substantiate items properly. See sec. 1.6662-3(b)(1), Income
Tax Regs. The term “disregard” includes any careless, reckless,
or intentional disregard. Sec. 6662(c). No penalty shall be
imposed if it is shown that there was reasonable cause for the
underpayment and the taxpayer acted in good faith with respect to
the underpayment. See sec. 6664(c). The determination of
whether a taxpayer acted with reasonable cause and good faith
within the meaning of section 6662(c) is made case-by-case,
taking into account all the pertinent facts and circumstances.
See sec. 1.6664-4(b)(1), Income Tax Regs.
We find petitioner’s testimony conflicting,7 and without
corroborating evidence, self-serving. See Niedringhaus v.
Commissioner, supra at 212. At trial, petitioner failed to
establish that he acted in good faith with respect to the claimed
losses. Petitioner, a practicing lawyer during the year in
issue, failed to make inquiry and obtain advice as to the
necessary steps to dissolve a corporate entity. He also failed
7 For instance, although petitioner testified that he
obtained a new sales tax number for Kramer Hospitality Services
as a sole proprietorship, the record shows that all relevant
documents (i.e., Illinois Business Registration, Form SS-4,
application for new EIN, Illinois Department of Revenue Sale and
Use Tax Return, and Payroll Transfers New Subscriber Information
Form) indicate that Kramer Hospitality was formed as a
partnership, rather than a sole proprietorship.
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