- 26 -
v. Helvering, 290 U.S. 111, 115 (1933); Luman v. Commissioner, 79
T.C. 846, 860-861 (1982); Bixby v. Commissioner, 58 T.C. 757,
791-792 (1972).
Negligence is defined as the failure to exercise the due
care that a reasonable and ordinarily prudent person would
exercise under the circumstances. See Neely v. Commissioner, 85
T.C. 934, 947 (1985). When considering the negligence addition
to tax, we evaluate the particular facts of each case, judging
the relative sophistication of the taxpayer and the manner in
which he approached his investment. See Merino v. Commissioner,
196 F.3d 147, 154 (3d Cir. 1999) (“The inquiry into a taxpayer’s
negligence is highly individualized, and turns on all of the
surrounding circumstances including the taxpayer’s education,
intellect, and sophistication.”), affg. T.C. Memo. 1997-385; see
also McPike v. Commissioner, T.C. Memo. 1996-46; Turner v.
Commissioner, T.C. Memo. 1995-363.
A taxpayer may avoid liability for the addition to tax for
negligence under section 6653(a)(1) and (2) if he reasonably
relied on competent professional advice. United States v. Boyle,
469 U.S. 241, 250-251 (1985); Freytag v. Commissioner, 89 T.C.
849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501
U.S. 868 (1991). However, reliance on professional advice,
19(...continued)
applicable in this case.
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