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record as a whole, we find that no such loans or gifts were made
to petitioners.
We sustain respondent’s determination of unreported income.
2. Accuracy-related penalties
Section 6662(a) and (b)(1) imposes an accuracy-related
penalty equal to 20 percent of an underpayment of tax
attributable to negligence or disregard of rules or regulations.
As to the portion of the accuracy-related penalties determined in
the notice of deficiency, petitioners bear the burden of proving
that determination wrong. Rule 142(a); Bixby v. Commissioner,
58 T.C. 757, 791-792 (1972). Respondent concedes that he bears
the burden of proving the correctness of the accuracy-related
penalties alleged in answer.
Negligence includes a failure to attempt reasonably to
comply with the Code, and disregard includes a careless,
reckless, or intentional disregard. Sec. 6662(c). An
underpayment is not attributable to negligence or disregard to
the extent that the taxpayer shows that the underpayment is due
to the taxpayer’s reasonable cause and good faith. See secs.
1.6662-3(a), 1.6664-4(a), Income Tax Regs. Reasonable cause
requires that the taxpayer have exercised ordinary business care
and prudence as to the disputed item. United States v. Boyle,
469 U.S. 241 (1985); see also Neonatology Associates P.A. v.
Commissioner, supra at 98.
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