-276-
attempt to comply with Code provisions. Sec. 6662(c).
“Negligence is lack of due care or failure to do what a
reasonable and ordinarily prudent person would do under the
circumstances.” Marcello v. Commissioner, 380 F.2d 499, 506 (5th
Cir. 1967), affg. in part and remanding in part 43 T.C. 168
(1964) and T.C. Memo. 1964-299; see Neely v. Commissioner, 85
T.C. 934, 947 (1985). For purposes of section 6662, the term
“disregard” includes any careless, reckless, or intentional
disregard.193 Sec. 6662(c).
A return position that has a reasonable basis is not
attributable to negligence. Sec. 1.6662-3(a), Income Tax Regs.
A reasonable basis connotes significantly more than not being
frivolous or patently improper. Sec. 1.6662-3(b)(3), Income Tax
Regs. The reasonable basis standard is not satisfied by a return
position that is merely arguable or that is merely a colorable
claim. Id.
193 The term “rules or regulations” includes the provisions
of the Code, temporary or final regulations issued under the
Code, and revenue rulings or notices issued by the Internal
Revenue Service. Sec. 1.6662-3(b)(2), Income Tax Regs. A
disregard of rules or regulations is “careless” if the taxpayer
does not exercise reasonable diligence to determine the
correctness of a return position that is contrary to the rule or
regulation. Id. A disregard is “reckless” if the taxpayer makes
little or no effort to determine whether a rule or regulation
exists, under circumstances which demonstrate a substantial
deviation from the standard of conduct that a reasonable person
would observe. Id. A disregard is “intentional” if the taxpayer
knows of the rule or regulation that is disregarded. Id.
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