Eugene A. Sanders - Page 10

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          Helvering, 290 U.S. 111, 115 (1933); Bixby v. Commissioner, 58              
          T.C. 757, 791 (1972).                                                       
               Section 6662(a) imposes a penalty of 20 percent of the                 
          portion of the underpayment of tax attributable to the taxpayer’s           
          negligence, disregard of rules or regulations, or substantial               
          understatement of income tax.  Sec. 6662(a), (b)(1) and (2).                
               Negligence is defined as the lack of due care or failure to            
          do what a reasonable and ordinarily prudent person would do under           
          the circumstances.  Neely v. Commissioner, 85 T.C. 934, 947                 
          (1985).  Negligence includes any failure to make a reasonable               
          attempt to comply with the law.  Sec. 6662(c); sec. 1.6662-                 
          3(b)(1), Income Tax Regs.  Section 1.6662-3(b)(1), Income Tax               
          Regs., provides that negligence is strongly indicated where “A              
          taxpayer fails to make a reasonable attempt to ascertain the                
          correctness of a deduction, credit or exclusion on a return which           
          would seem to a reasonable and prudent person to be ‘too good to            
          be true’ under the circumstances”.  “Disregard” has been                    
          described as any careless, reckless, or intentional disregard.              
          Sec. 6662(c).                                                               
               Section 6664(c)(1) provides that the penalty under section             
          6662(a) shall not apply to any portion of an underpayment if                
          it is shown that there was reasonable cause for the taxpayer’s              
          position with respect to that portion and that the taxpayer acted           
          in good faith with respect to that portion.  The determination of           

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