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applies to the entire underpayment if any part of the
underpayment is due to negligence or disregard of rules or
regulations.
Respondent contends that petitioner’s failure to maintain
adequate books and records and to provide them to respondent
supports the determination that petitioner was negligent. See
sec. 1.6662-3(b)(1), Income Tax Regs. We agree with respondent
that petitioner failed to maintain and to provide respondent or
the Court adequate records with respect to the claimed deductions
in connection with his option trading, travel, entertainment, and
meals. In addition, respondent contends that petitioner was
negligent in connection with the exclusion of the amount received
in settlement of his relationship with Prudential. Finally,
negligence has been asserted with respect to petitioner’s
claiming ordinary losses in connection with his option trading.
With respect to the exclusion of the settlement, petitioner
contends that he relied on his attorney’s advice that the
settlement was for punitive damages. The attorney’s letter,
however, merely advised petitioner of the characterization of the
settlement, not of the tax consequences. In addition, the
relevant law for the year in issue provided that punitive damages
were excludable from gross income only if arising from physical
injuries or physical sickness. Accordingly, it was not
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