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reasonable basis to support the tax treatment. Sec.
6662(d)(2)(B).
For the purposes of this section, a taxpayer is negligent
when he or she fails “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. Whether a taxpayer acted with reasonable cause and good
faith is measured by examining the relevant facts and
circumstances, and most importantly, the extent to which he
attempted to assess his proper tax liability. See Neely v.
Commissioner, 85 T.C. 934 (1985); Stubblefield v. Commissioner,
T.C. Memo. 1996-537; sec. 1.6664-4(b)(1), Income Tax Regs.
The record we consider reflects that petitioner did not
reasonably attempt to properly assess his income tax liability
with respect to the $116,000 received from Winston. The notes
taken by petitioner during the negotiations with Winston and his
trial testimony both reveal that he knew which tort claims were
and were not taxable. Petitioner’s revision of the settlement
payment allocations toward the release of several tort claims was
motivated by the need to lessen his tax burden and not because of
any specific tort claim. The settlement agreement and release
contain several tort claims with no specific allocation. Years
later, at trial, petitioner attempted to narrow the list to those
tort claims that he might have a chance to substantiate.
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