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provisions of the internal revenue laws. Sec. 6662(c).
Moreover, negligence is the failure to exercise due care or
failure to do what a reasonable and prudent person would do under
the circumstances. Neely v. Commissioner, 85 T.C. 934, 947
(1985). Disregard includes any careless, reckless, or
intentional disregard of rules or regulations. Sec. 6662(c);
sec. 1.6662-3(b)(2), Income Tax Regs. No penalty will be imposed
with respect to any portion of any 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).
For the same reasons that petitioner’s mental illness does
not excuse him from the addition to tax under section 6651(a)(1),
his mental illness does not excuse him from the accuracy-related
penalty under section 6662(a). In addition, petitioner was on
notice by the settlement agreement and the Form 1099 issued by
ATC that some or all of the $89,840 was subject to tax. Based
upon petitioner’s settlement discussions with ATC, there was no
reason for petitioner to believe that any of this amount was
excludable from his income. Petitioner did not seek professional
advice as to whether any of the $89,840 was taxable and
intentionally omitted that amount from the income tax return he
filed at the request of the Internal Revenue Service. Respondent
has satisfied his burden of production with respect to the
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