- 20 - exercise under the circumstances. See Neely v. Commissioner, 85 T.C. 934, 947-948 (1985). The pertinent question is whether a particular taxpayer’s actions are reasonable in light of the taxpayer’s experience, the nature of the investment, and the taxpayer’s actions in connection with the transactions. See Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 740 (1973); see also Turner v. Commissioner, T.C. Memo. 1995-363 (“When considering the negligence addition, we evaluate the particular facts of each case, judging the relative sophistication of the taxpayers as well as the manner in which the taxpayers approached their investment.”). The determination of negligence is factual. Respondent determined that petitioners are liable for negligence under section 6653(a)(1) and (2) with respect to the underpayment of tax attributable to petitioners’ investment in SAB Foam. Respondent’s determination of negligence is presumed correct, and petitioners have the burden of proving that they were not negligent. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933); see also Addington v. Commissioner, supra; Goldman v. Commissioner, 39 F.3d 402, 407 (2d Cir. 1994), affg. T.C. Memo. 1993-480; Luman v. Commissioner, 79 T.C. 846, 860-861 (1982); Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).9 9 Cf. sec. 7491(c), which places the burden of production on the Commissioner with respect to a taxpayer’s liability for penalties and additions to tax. Sec. 7491(c) is effective for court proceedings arising in connection with examinations (continued...)Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: May 25, 2011