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2. Negligence
Section 6662(a) imposes a penalty with respect “to any
portion of an underpayment of tax required to be shown on a
return” in an amount “equal to 20 percent of the portion of the
underpayment to which this section applies.” Section 6662
applies, inter alia, to underpayments attributable to negligence
or disregard of rules or regulations. Sec. 6662(b)(1).
“Negligence” includes any failure to make a reasonable attempt to
comply with the provisions of the Internal Revenue Code, and
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c). Also, “‘Negligence is a lack of due
care or the failure to do what a reasonable and ordinarily
prudent person would do under the circumstances.’” Freytag v.
Commissioner, 89 T.C. 849, 887 (1987) (quoting Marcello v.
Commissioner, 380 F.2d 499, 506 (5th Cir. 1967), affg. on this
issue 43 T.C. 168 (1964) and T.C. Memo. 1964-299), affd. 904 F.2d
1011 (5th Cir. 1990), affd. on other grounds 501 U.S. 868 (1991).
The question then is whether petitioners’ conduct meets the
reasonably prudent person standard. See id.
Petitioner made no attempt to keep records of his plumbing
and heating business as required. Moreover, he claimed
deductions for legal expenses and utilities that were, by his own
admission, clearly improper. We sustain respondent’s imposition
of the section 6662(a) penalty.
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