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determinations in a notice of deficiency are presumed correct,
and petitioner must establish otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933); cf. sec. 7491(c).5
Respondent determined that petitioner's underpayments were due to
negligence. Petitioner, therefore, has the burden of proving he
was not negligent in deducting his share of the partnership’s
losses. Estate of Mason v. Commissioner, 64 T.C. 651, 663
(1975), affd. 566 F.2d 2 (6th Cir. 1977); Bixby v. Commissioner,
58 T.C. 757, 791 (1972); Anderson v. Commissioner, T.C. Memo.
1993-607, affd. 62 F.3d 1266 (10th Cir. 1995).
Negligence is defined as the failure to exercise the due
care that a reasonable and ordinarily prudent person would
exercise under like circumstances. Anderson v. Commissioner,
62 F.3d 1266, 1271 (10th Cir. 1995), affg. T.C. Memo. 1993-607;
Neely v. Commissioner, 85 T.C. 934, 947 (1985); Glassley v.
Commissioner, T.C. Memo. 1996-206. The focus of inquiry is
on the reasonableness of the taxpayer’s actions in light of his
experience and the nature of the investment. Henry Schwartz
5 The Internal Revenue Service Restructuring & Reform Act
of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 726, added
sec. 7491(c), which places the burden of production on the
Secretary with respect to a taxpayer’s liability for penalties
and additions to tax in court proceedings arising in connection
with examinations commencing after July 22, 1998. Petitioner
does not contend, nor is there evidence, that his examination
commenced after July 22, 1998, or that sec. 7491 is applicable in
this case.
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