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the cost of commencing and engaging in the farming of jojoba by
claiming, inaccurately, that capital expenditures in jojoba
plantations might be treated as research or experimental
expenditures for purposes of claiming deductions under section
174." Id.
As a result of Blythe I's TEFRA proceeding, petitioner and
his wife were assessed tax deficiencies of $10,340 for 1982 and
$394 for 1983, plus interest. Subsequently, respondent issued a
notice of deficiency to petitioner and his wife for 1982 and 1983
for affected items, determining that they are liable for the
additions to tax for negligence under section 6653(a)(1) and (2)
for 1982 and 1983 and a substantial understatement of tax under
section 6661 for 1982. These additions to tax are the subject of
the instant case. Petitioner's wife did not petition this Court
and did not testify at trial.
The first issue is the additions to tax for negligence under
section 6653(a)(1) and (2) for both years at issue. Section
6653(a)(1) imposes an addition to tax in an amount equal to 5
percent of an underpayment of tax if any part of the underpayment
is due to negligence or intentional disregard of rules or
regulations. Section 6653(a)(2) imposes another addition to tax
in an amount equal to 50 percent of the interest due on the
portion of the underpayment attributable to negligence or
intentional disregard of rules or regulations. Respondent’s
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