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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 determinations in a notice
of deficiency are presumed correct, and petitioners must
establish otherwise. Rule 142(a); Welch v. Helvering, 290 U.S.
111, 115 (1933); cf. sec. 7491(c).9 Respondent determined that
petitioners’ underpayments were due to negligence. Petitioners,
therefore, have the burden of proving they were not negligent in
deducting their share of the partnership’s losses. See 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. See Anderson v. Commissioner,
9 The Internal Revenue Service Restructuring & Reform Act
of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 685, 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. Petitioners do
not contend, nor is there evidence, that their examination
commenced after July 22, 1998, or that sec. 7491 is applicable in
this case.
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