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cash. We also find credible Jack’s explanation that many of his
contractors, who worked until after the banks had closed,
preferred that he pay them in cash.
Accordingly, while we have suspicions that petitioner’s
activities may have been fraudulent, we conclude that respondent
has failed to adduce evidence to prove fraud clearly and
convincingly. Because respondent has not proved fraud, we turn
to his alternative argument as to imposing accuracy-related
penalties.
III. Accuracy-Related Penalties
Respondent has proposed the section 6662(a) accuracy-related
penalty against petitioners for each of the years in issue.
Section 6662(a) authorizes respondent to impose a penalty in an
amount equal to 20 percent of the portion of the underpayments
that is attributable to the items set forth in section 6662(b).
Section 6662(b)(1) includes any underpayment attributable to
negligence or disregard of rules or regulations. Negligence is
defined as "any failure to make a reasonable attempt to comply
with the provisions of * * * [the Internal Revenue Code]". Sec.
6662(c); see also Neely v. Commissioner, 85 T.C. 934, 947 (1985)
(negligence is lack of due care or failure to do what a
reasonable and prudent person would do under the circumstances).
Negligence also includes any failure by the taxpayer to keep
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