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worthless during 1999. Cimarron Trust Estate v. Commissioner, 59
T.C. 195 (1959); Flood v. Commissioner, T.C. Memo. 2001-39.
Although petitioners claimed the loss in 1999, the record shows
that petitioners deemed the debt worthless as of October 1998,
when petitioner filed his bankruptcy petition. Accordingly,
petitioners are not entitled to the business bad debt deduction.
As we have found that petitioners are not entitled to their
claimed deductions, we consider next whether petitioners are
liable for a section 6662 accuracy-related penalty for
negligence. Section 6662(a) provides that if any portion of any
underpayment is due to negligence, then a taxpayer will be liable
for a penalty equal to 20 percent of the underpayment of tax
required to be shown on the return that is attributable to the
taxpayer’s negligence. Negligence is defined as “the lack of due
care or failure to do what a reasonable and ordinarily prudent
person would do” under the circumstances. Niedringhaus v.
Commissioner, 99 T.C. 202, 221 (1992). “Negligence” includes the
failure to make a reasonable attempt to comply with the
provisions of the Internal Revenue Code and also includes any
failure to keep adequate books and records or to substantiate
items properly. Id.; sec. 1.6662-3(b)(1), Income Tax Regs.
With respect to the accuracy-related penalty, respondent
bears the burden of production. Sec. 7491(c); Higbee v.
Commissioner, 116 at 446. In that regard, respondent “must come
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