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the tax returns and forms on which it purportedly relies.
Furthermore, adjustments may be rendered necessary by the Court’s
holdings on other issues. Thus, while we reject petitioners’
$2,800,000 for lack of evidence, we would expect that as part of
the parties’ Rule 155 computations, revised calculations
consistent with this opinion would retrace the basis of the
exchanged Excellence shares.
D. Accuracy-Related Penalty
Subsection (a) of section 6662 imposes an accuracy-related
penalty in the amount of 20 percent of any underpayment that is
attributable to causes specified in subsection (b). Subsection
(b) of section 6662 then provides that among the causes
justifying imposition of the penalty are: (1) Negligence or
disregard of rules or regulations and (2) any substantial
understatement of income tax.
“Negligence” is defined in section 6662(c) as “any failure
to make a reasonable attempt to comply with the provisions of
this title”, and “disregard” as “any careless, reckless, or
intentional disregard.” Caselaw similarly states that
“‘Negligence is a lack of due care or the failure to do what a
reasonable and ordinarily prudent person would do under the
circumstances.’” Freytag v. Commissioner, 89 T.C. 849, 887
(1987) (quoting Marcello v. Commissioner, 380 F.2d 499, 506 (5th
Cir. 1967), affg. on this issue 43 T.C. 168 (1964) and T.C. Memo.
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