- 5 -
do not entertain the issue. See Rule 34(b)(4). We turn to the
issues that are properly before the Court.
Accuracy-Related Penalties
Section 6662(a) provides that “there shall be added to the
tax an amount equal to 20 percent of the portion of the
underpayment to which this section applies.” Section 6662(b)
provides in part:
SEC. 6662(b). Portion of Underpayment to Which
Section Applies.–-This section shall apply to the portion of
any underpayment which is attributable to 1 or more of the
following:
(1) Negligence or disregard of rules or
regulations.
(2) Any substantial understatement of income
tax.[4]
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.” Korshin v. Commissioner, 91 F.3d 670, 672
(4th Cir. 1996), affg. T.C. Memo. 1995-46. Negligence “includes
any failure to make a reasonable attempt to comply with the
provisions” of the Internal Revenue Code. Sec. 6662(c).
“‘Negligence’ also includes any failure by the taxpayer to keep
adequate books and records or to substantiate items properly.”
Sec. 1.6662-3(b)(1), Income Tax Regs.
4 We need not address whether petitioners’ underpayments were
substantial because we hold that petitioners are liable for the
accuracy-related penalties due to negligence.
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