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did what a reasonably prudent person would have done under the
circumstances. See Rule 142(a); Hansen v. Commissioner, supra;
Hall v. Commissioner, 729 F.2d 632, 635 (9th Cir. 1984), affg.
T.C. Memo. 1982-337; Bixby v. Commissioner, 58 T.C. 757, 791
(1972).8
A central theme in petitioner’s arguments concerning several
issues in this case, including whether she was negligent, is her
assertion that she was not an investor in RCR #1. We therefore
address this factual issue before addressing petitioner’s
liability for the additions to tax for negligence.
There is little documentary evidence in the record
concerning the initial investment in RCR #1 by Mr. Barnes and
petitioner. Most notably, none of the original partnership
agreements were received into evidence. Thus, there is no
documentary evidence corroborating petitioner’s assertion that
she did not sign the original documents. The record does include
a Schedule K-1 that was issued by RCR #1 to Mr. Barnes in 1981.
Petitioner argues that this document shows that she was not an
investor in the partnership. Based on the record as a whole,
however, we decline to give the Schedule K-1 such significant
8Sec. 7491, as currently in effect, shifts the burden of
production and/or proof to the Commissioner in certain
situations. However, this section is not applicable in this case
because the underlying examination did not commence after July
22, 1998. Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727.
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