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losses, such as by consulting an independent tax adviser, before
claiming the losses as deductions on their 1991 return. Instead,
petitioners essentially ignored the letters, merely sending
copies of them to the Hoyt organization as petitioners had been
instructed to do.
Finally, petitioners’ actions with respect to the 1991
return reflect a nonchalant attitude with respect thereto, rather
than a reasonable attempt to ascertain their proper tax
liability. For example, on the statement attached to
petitioners’ return regarding material participation, petitioners
merely stated that they worked “all that was needed to be done”,
rather than specifying an accurate number of hours. When
questioned at trial concerning a partnership-related item
appearing on the return, Mr. Van Scoten testified twice that he
“probably looked at it and did not pay any attention to” the
amount appearing on the return. Petitioner further testified
that, in reviewing the 1991 return, “like most naive people, I’d
look for the smiley face at the end, not the numbers that got to
it.”
Upon the basis of the record before the Court, we conclude
that petitioners were negligent in 1991 in deducting the $45,510
partnership loss from DSBS 87-C.
IV. Alleged Defenses to the Accuracy-Related Penalty
Section 6664(c)(1) provides that the section 6662(a)
accuracy-related penalty is not imposed “with respect to any
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