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the partnership at issue were attributable to tax-motivated
transactions within the meaning of section 6621(c). We also
found that other recyclers were commercially available during the
year in issue,18 and we relied heavily on the overvaluation of
the recyclers in reaching the conclusion that the transaction
lacked a business purpose. Id.
A. Section 6653(a)(1) and (2)
Section 6653(a)(1) provides for an addition to tax equal to
5 percent of the underpayment if any part of the underpayment is
due to negligence or intentional disregard of rules and
regulations. Section 6653(a)(2) provides for an addition to tax
equal to 50 percent of the interest payable with respect to the
portion of the underpayment attributable to negligence or
intentional disregard of the rules. Respondent’s determination
of negligence is presumed correct, and petitioner has the burden
of proving that he was not negligent.19 See Rule 142(a); Welch
18See also, e.g., Barlow v. Commissioner, T.C. Memo. 2000-
339; Ferraro v. Commissioner, T.C. Memo. 1999-324; Ulanoff v.
Commissioner, T.C. Memo. 1999-170; Merino v. Commissioner, T.C.
Memo. 1997-385, affd. 196 F.3d 147 (3d Cir. 1999), where we found
that several machines capable of densifying polyethylene and
polystyrene were commercially available in 1982 for $20,000 to
$200,000.
19Effective for court proceedings arising in connection with
examinations commencing after July 22, 1998, sec. 7491(c) places
the burden of production on the Commissioner with respect to a
taxpayer’s liability for penalties and additions to tax.
Petitioner does not contend, nor is there any evidence, that his
examination commenced after July 22, 1998 or that sec. 7491(c) is
(continued...)
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