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OPINION
Under section 6653(a), (a)(1), and (a)(2), an addition to
tax is imposed on the portion of an underpayment of tax
attributable to a taxpayer’s negligence equal to 5 percent of the
underpayment plus 50 percent of the interest due thereon under
section 6601.
Negligence is generally described as the failure to use due
care or to do what a reasonable and ordinarily prudent person
would do under the circumstances. Allen v. Commissioner, 925
F.2d 348, 353 (9th Cir. 1991), affg. 92 T.C. 1 (1989); Laverne v.
Commissioner, 94 T.C. 637, 652 (1990), affd. without published
opinion 956 F.2d 274 (9th Cir. 1992), affd. without published
opinion sub nom. Cowles v. Commissioner, 949 F.2d 401 (10th Cir.
1991).
Good faith reliance on the advice of a tax professional may
indicate that a taxpayer was not negligent. Allen v.
Commissioner, supra at 353-354; Collins v. Commissioner, 857 F.2d
1383, 1386 (9th Cir. 1988), affg. T.C. Memo. 1987-217. Reliance
on the advice of a tax professional may not be reasonable where
the professional had no firsthand knowledge of the proposed
investment and where the professional only made a cursory review
of the proposed investment. Sacks v. Commissioner, 82 F.3d 918,
920 (9th Cir. 1996), affg. T.C. Memo. 1994-217; Collins v.
Commissioner, supra at 1386.
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Last modified: May 25, 2011