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1.6662-3(b)(1)(ii), Income Tax Regs. “Disregard” includes any
careless, reckless, or intentional disregard. Sec. 6662(c).
Respondent has introduced evidence sufficient to establish
the appropriateness of imposing an accuracy-related penalty under
section 6662. Higbee v. Commissioner, supra at 446-447.
Petitioner has the burden of proving that respondent’s
determination is incorrect with respect to the portion of the
underpayment of tax attributable to items set forth in the notice
of deficiency. Id. Respondent has the burden of proof in regard
to the portion of the underpayment attributable to the new issue
(the capital gain income). Rule 142(a); Harrison v.
Commissioner, T.C. Memo. 1994-268. The facts of this case permit
us to opine on this issue on the merits without regard to which
party has the burden of proof.
Respondent contends that petitioner was negligent both in
failing to report both his pro rata share of income and
deductions from Edgington Mullins, as reported on Schedule K-1,
and in failing to report capital gains from the sale of his
shares of Edgington Mullins stock. We agree. Petitioner’s only
argument at trial was that he believed that he sold his Edgington
Mullins stock at a loss because he originally purchased his
shares for $35,000 and only received $28,000 when he sold the
shares to Mr. Taylor. Petitioner admits that he did not inform
his tax preparer that he sold his interest in Edgington Mullins
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