Tony L. Zidar and Kathleen I. Zidar - Page 18




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          pleasure from his stock car activity.  This factor favors                   
          respondent.                                                                 
               Petitioners place great reliance on the case of Mills v.               
          United States, 699 F. Supp. 1245 (N.D. Ohio 1988), which held               
          that a taxpayer’s motorcycle racing activity qualified as a trade           
          or business.  Unlike the taxpayer in Mills, however, Tony had no            
          separate bank account for his stock car activity, retained no               
          business and financial adviser to aid him in his racing                     
          activities, participated in no special exhibitions to attract               
          financial sponsorship of large companies, and never actually                
          raced his vehicle (except in the ill-fated qualifying round).               
               On the basis of all the evidence, we conclude that                     
          petitioners have failed to demonstrate that Tony entered into the           
          stock car activity with a good faith expectation of making a                
          profit.  Accordingly, we sustain respondent’s determination on              
          this issue.                                                                 
          C.   Accuracy-Related Penalty Pursuant to Section 6662(a)                   
               Respondent determined that petitioners are liable for the              
          accuracy-related penalty under section 6662.  Section 6662(a)               
          imposes a 20-percent penalty on any portion of an underpayment              
          that is attributable to, among other things, negligence or                  
          disregard of the rules or regulations or any substantial                    
          understatement of income tax.  Negligence is the lack of due care           
          or failure to do what a reasonable and ordinarily prudent person            







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