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failure to make a reasonable attempt to comply with the Internal
Revenue Code including a careless, reckless, or intentional
disregard of the Code.
Section 7491(c) applies to examinations which commence after
July 22, 1998. Pursuant to this section, respondent has the
burden of production with respect to the liability of any
individual for any penalty or addition to tax. See sec. 7491(c).
“[F]or the Commissioner to meet his burden of production, the
Commissioner must come forward with sufficient evidence
indicating that it is appropriate to impose the relevant
penalty.” Higbee v. Commissioner, 116 T.C. 438, 446 (2001). In
Higbee, we found that respondent met his burden of production for
the negligence penalty by showing that petitioners failed to keep
adequate books and records or to substantiate properly the items
in question. Id. at 449. Consequently, we conclude that
respondent has met his burden of production for his determination
of the accuracy-related penalty based on negligence or disregard
of rules or regulations.
Pursuant to section 6662(c), negligence includes any failure
by a taxpayer to keep adequate books or records. See sec.
1.6662-3(b), Income Tax Regs. 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
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