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$30,000 check, does not establish that petitioner conducted a
real estate investment business during 1996 and that petitioner
was entitled to an ordinary and necessary business deduction
related to site visits that petitioner’s father allegedly made
during the last quarter of 1996. See Wood v. Commissioner, 338
F.2d 602, 605 (9th Cir. 1964), affg. 41 T.C. 593 (1964).
Accordingly, petitioner is not entitled to an ordinary and
necessary business expense deduction for the $30,000 paid to his
father.
B. Accuracy-Related Penalty
As we have found that petitioner is not entitled to the
claimed deduction, we consider next whether petitioner is 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 ordinary prudent person would
do” under the circumstances. Niedringhaus v. Commissioner, 99
T.C. 202, 221 (1992). “Negligence” includes the 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
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