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Petitioner bears the burden of proving his basis in the
securities. See Rule 142(a). Petitioner has failed to prove
that the securities, other than the Honeywell shares, were
acquired from his grandmother on or about May 28, 1993, or that
the Honeywell shares were received from his mother by gift.
Since petitioner has failed to prove that the securities have any
basis in excess of zero, we sustain respondent’s adjustment
including in full the proceeds from the sale of the securities in
petitioner’s gross income.
IV. Additions to Tax
A. Respondent's Section 6651(a)(1) Determination
Section 6651(a)(1) provides for an addition to tax in the
event a taxpayer fails to file a timely return (determined with
regard to any extension of time for filing), unless it is shown
that such failure is due to reasonable cause and not due to
willful neglect. The amount of the addition is equal to 5
percent of the amount required to be shown as tax on the
delinquent return for each month or fraction thereof during which
the return remains delinquent, up to a maximum addition of 25
percent for returns more than 4 months delinquent. Reasonable
cause contemplates that the taxpayer exercised ordinary business
care and prudence and was nonetheless unable to file a return
within the prescribed time. United States v. Boyle, 469 U.S.
241, 246 (1985); sec. 301.6651-1(c)(1), Proced. & Admin. Regs.
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