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The final issue is whether petitioners are liable for the
accuracy-related penalty under section 6662(a) for the years at
issue. As relevant here, section 7491(c) places the burden of
production on respondent in court proceedings with respect to the
liability of any individual for any penalty, addition to tax, or
additional amount imposed. The additional tax imposed pursuant
to section 6662(a) falls within the scope of section 7491(c).
Respondent, therefore, bears the burden of production on this
issue. However, petitioners continue to bear the burden of
proving that respondent's determination is incorrect. Higbee v.
Commissioner, 116 T.C. 438, 446-447 (2001).
Section 6662(a) provides for an accuracy-related penalty
equal to 20 percent of any portion of an underpayment of tax
required to be shown on the return that is attributable to the
taxpayer’s negligence or disregard of rules or regulations. Sec.
6662(a) and (b)(1). Negligence consists of any failure to make a
reasonable attempt to comply with the provisions of the Internal
Revenue Code. Sec. 6662(c). Disregard consists of any careless,
reckless, or intentional disregard. Id.
The courts have refined the Code definition of negligence as
a lack of due care or failure to do what a reasonable and prudent
person would do under similar circumstances. Allen v.
Commissioner, 925 F.2d 348, 353 (9th Cir. 1991), affg. 92 T.C. 1
(1989). Treasury regulations further provide that negligence
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