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timely file their respective returns. Petitioners failed to show
that they exercised ordinary care and prudence in these cases.
Accordingly, petitioners are liable for the additions to tax
under section 6651(a)(1) as determined in the notices of
deficiency.
Section 6653(a)(1) for taxable year 1988 provides that if
any portion of an underpayment of tax is due to negligence or
disregard of rules or regulations, an amount equal to 5 percent
of the underpayment is added to the tax. Negligence is defined
as the failure to exercise the due care that a reasonable and
ordinarily prudent person would employ under the circumstances.
Neely v. Commissioner, 85 T.C. 934, 947 (1985). The question is
whether a particular taxpayer’s actions in connection with the
transactions were reasonable in light of his experience and the
nature of the investment or business. Henry Schwartz Corp. v.
Commissioner, 60 T.C. 728, 740 (1973). Respondent’s
determinations are presumed correct and petitioners bear the
burden of establishing otherwise. Welch v. Helvering, 290 U.S.
at 115; Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).3
Petitioners maintain that they prepared Form 1099 for window
installation services rendered by Joseph Sweeney in 1988. The
record shows that petitioners failed to prepare and file a return
3 We note that sec. 7491 is inapplicable in these cases
because petitioners’ respective examinations commenced prior to
July 22, 1998.
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