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6651(a)(1). Higbee v. Commissioner, supra at 447. Petitioner
stated that he did not timely file a 1997 tax return because
taxes were withheld from the back wages portion of the settlement
payment. However, the settlement agreement expressly provided
that some or all of the $89,840 may be taxable and that ATC would
issue a Form 1099 for that amount.
Although on two occasions petitioner was treated for mental
illness, nothing in the record suggests that he was so
incapacitated during the period in issue as to render him
incapable of exercising ordinary business care and prudence.
Petitioner was hospitalized for diagnosis and treatment of his
mental illness for 10 days in early 1996. Petitioner also was
hospitalized for mental illness for approximately 5 weeks in
2002. There is no evidence that petitioner had any mental
problems during the intervening time period. In fact, during
that time period, petitioner brought suit against ATC, admittedly
prepared the complaint, prepared a prearbitration memorandum,
conducted cross-examination, and negotiated a settlement of
$115,000 with ATC. We conclude that petitioner is liable for the
addition to tax under section 6651(a)(1) for taxable year 1997.
Section 6662(a) imposes a 20-percent penalty on the portion
of any underpayment of tax attributable to negligence or
disregard of rules or regulations. Sec. 6662(b)(1). Negligence
is any failure to make a reasonable attempt to comply with the
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