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due on the portion of the underpayment attributable to negligence
or intentional disregard of rules and regulations.
Negligence includes “any failure to reasonably attempt to
comply with the tax code, including the lack of due care or the
failure to do what a reasonable or ordinarily prudent person
would do under the circumstances.” Chamberlain v. Commissioner,
66 F.3d 729, 732 (5th Cir. 1995), affg. in part and revg. in part
T.C. Memo. 1994-228. Generally, courts look both to the
underlying investment and to the taxpayer’s position taken on the
return in evaluating whether a taxpayer was negligent. See Sacks
v. Commissioner, 82 F.3d 918, 920 (9th Cir. 1996), affg. T.C.
Memo. 1994-217. However, the Court of Appeals for the Fifth
Circuit, to which appeal lies in this case, has held that the
proper inquiry in negligence cases is whether the taxpayer was
reasonable in claiming the loss. See Reser v. Commissioner, 112
F.3d 1258, 1271 (5th Cir. 1997), affg. in part and revg. in part
T.C. Memo. 1995-572; Durrett v. Commissioner, 71 F.3d 515, 518
(5th Cir. 1996), affg. in part and revg. in part T.C. Memo. 1994-
179; Chamberlain v. Commissioner, supra at 733. We therefore
focus on the reasonableness of petitioners’ claiming the loss on
their return.
Petitioners argue that they were not negligent because they
relied on the advice of a professional, Mr. Meinke, in claiming
the loss. Good faith reliance on professional advice concerning
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