Kenneth and Dorothy Hitchen - Page 24

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          which they had remitted to Mr. Hoyt as part of their investment             
          and which they never received back.  Nevertheless, petitioners              
          believed that this money was being used for their own personal              
          benefit--at the time that they claimed the refunds, they believed           
          that they would eventually benefit from them.  Petitioners also             
          lost a substantial amount of out-of-pocket cash which they paid             
          to Mr. Hoyt in the years following the years in issue.  In fact,            
          some of these later payments were made in response to not-so-               
          thinly-veiled threats by Mr. Hoyt of retaliatory action if                  
          petitioners failed to remit the payments.  However unfortunate              
          petitioners’ situation became, it cannot alter our conclusion               
          that petitioners were negligent with respect to entering the Hoyt           
          investment, and that they were negligent with respect to the                
          positions that they took on their tax returns and the Form 1045             
          in the years in issue.                                                      
               We hold that petitioners are liable for the section 6653               
          additions to tax for negligence with respect to the entire amount           
          of the deficiency in each of 1984, 1985, 1987, and 1988.                    
               With respect to 1989, we note that only one section 6662(a)            
          penalty may be applied with respect to any given portion of an              
          underpayment, even if that portion is attributable to more than             
          one of the relevant factors.  Sec. 1.6662-2(c), Income Tax Regs.            
          Accordingly, we hold that petitioners are liable for the section            
          6662(a) penalty for negligence with respect to that portion of              

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