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As previously noted, section 162(a) generally allows
deductions for ordinary and necessary expenses paid or incurred
in carrying on the taxpayer’s trade or business. Petitioners
claim that Morgan Farms was a trade or business during 1999, but
petitioner’s vague testimony on the point compels us to conclude
otherwise. Petitioner conceded entitlement to the deductions
attributable to Morgan Farms that petitioners claimed on their
1998 return-–he should have made a similar concession for 1999.
Petitioners are not entitled to the deductions claimed on the
Schedule C included with their 1999 return. Respondent’s
disallowances of those deductions are sustained.
Section 6662(a) Penalty
For each year in issue, respondent imposed a penalty under
section 6662(a) on the ground that the underpayment of tax
required to be shown on petitioners’ return is due to negligence
or disregard of rules or regulations. Sec. 6662(a) and (b)(1).
Negligence is defined to include any failure to make a reasonable
attempt to comply with the provisions of the Internal Revenue
Code. Sec. 6662(c). It is further defined as the failure to do
what a reasonable person with ordinary prudence would do under
the same or similar circumstances. Neely v. Commissioner, 85
T.C. 934, 947 (1985). Disregard is defined to include any
careless, reckless, or intentional disregard. Sec. 6662(c). An
accuracy-related penalty is not imposed with respect to any
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