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overvaluation of the recyclers; and (5) we held that the
partnership losses and tax credits claimed with respect to the
Plastics Recycling partnership at issue were attributable to tax-
motivated transactions within the meaning of section 6621(c). We
also found that other recyclers were commercially available
during the years in issue. See id. In reaching the conclusion
that the transaction lacked a business purpose, this Court relied
heavily upon the overvaluation of the recyclers. Similarly, in
Gottsegen v. Commissioner, T.C. Memo. 1997-314, we found that
each EPS recycler had a fair market value of not more than
$50,000 and relied heavily on the overvaluation of the recyclers
in concluding that the taxpayer was negligent and liable for
accuracy-related penalties. See Addington v. Commissioner,
supra.
Issue 1. Section 6653(a)(1) and (2) Additions to Tax for
Negligence
Section 6653(a)(1) provides for an addition to tax equal to
5 percent of the underpayment if any part of the underpayment of
tax is due to negligence or intentional disregard of rules or
regulations. Section 6653(a)(2) provides for an addition to tax
equal to 50 percent of the interest payable with respect to the
portion of the underpayment attributable to negligence or
intentional disregard of rules or regulations.
Negligence is defined as the failure to exercise the due
care that a reasonable and ordinarily prudent person would
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