Michael White - Page 7

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          of attorney designating Mr. Beltran as his representative, nor              
          did Mr. Beltran undertake to represent petitioner with the                  
          Internal Revenue Service or otherwise assist petitioner in                  
          addressing respondent's inquiries.                                          
               Petitioner contends he should be absolved of liability for             
          the section 6662(a) penalties because he relied on the                      
          representations of his return preparer.                                     
               Section 6662(a) provides for an accuracy-related penalty               
          equal to 20 percent of any portion of an underpayment of tax                
          required to be shown on the return that is attributable to the              
          taxpayer's negligence or disregard of rules or regulations.  Sec.           
          6662(a) and (b)(1).  Negligence consists of any failure to make a           
          reasonable attempt to comply with the provisions of the Internal            
          Revenue Code and disregard consists of any careless, reckless, or           
          intentional disregard.  Sec. 6662(c).  The courts have refined              
          the Code definition of negligence as a lack of due care or                  
          failure to do what a reasonable and prudent person would do under           
          similar circumstances.  Allen v. Commissioner, 925 F.2d 348, 353            
          (9th Cir. 1991), affg. 92 T.C. 1 (1989).  Section 1.6662-3(b)(1),           
          Income Tax Regs., provides that "Negligence is strongly indicated           
          where * * * a taxpayer fails to make a reasonable attempt to                
          ascertain the correctness of a deduction * * * on a return which            
          would seem to a reasonable and prudent person to be 'too good to            
          be true' under the circumstances".  An exception applies when the           

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