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previously assessed (or collected without assessment) over the
amount of rebates made. Sec. 6664(a).
“Negligence” is defined as “any failure to make a reasonable
attempt to comply with the provisions of this title” and
“disregard” means “any careless, reckless, or intentional
disregard.” Sec. 6662(c). Similarly, caselaw defines negligence
as a lack of due care or “‘the failure to do what a reasonable
and ordinarily prudent person would do under the circumstances.’”
Freytag v. Commissioner, 89 T.C. 849, 887 (1987) (quoting
Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir. 1967),
affg. on this issue 43 T.C. 168 (1964) and T.C. Memo. 1964-299)),
affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991).
Pursuant to the regulations, “‘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.
Section 6664(c) provides an exception to the penalty imposed
under section 6662(a). “No penalty shall be imposed under this
part with respect to any portion of an underpayment if it is
shown that there was a reasonable cause for such portion and that
the taxpayer acted in good faith with respect to such portion.”
Sec. 6664(c)(1). The determination of whether the taxpayer acted
with reasonable cause and in good faith is made on a case-by-case
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