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property and stock, as well as the amount of the sales proceeds,
and from prior returns could have determined the depreciation
allowed or allowable.
II. Addition to Tax
The Commissioner bears the burden of production in any court
proceeding with respect to an individual’s liability for
penalties or additions to tax. Sec. 7491(c). To meet this
burden, the Commissioner must present “sufficient evidence
indicating that it is appropriate to impose the relevant penalty”
or addition to tax. Higbee v. Commissioner, 116 T.C. 438, 446
(2001). In instances where an exception to the penalty or
addition to tax is afforded upon a showing of reasonable cause,
the taxpayer bears the burden of showing such cause. Id. at 446-
447.
Section 6651(a)(1) imposes a 5-percent addition to tax for
each month or portion thereof a required return is filed after
the prescribed due date, not to exceed 25 percent in the
aggregate, unless such failure to file timely is due to
reasonable cause and not due to willful neglect. Although not
defined in the Code, “reasonable cause” is described by the
applicable regulations as the “exercise of ordinary business care
and prudence”. Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.;
see also United States v. Boyle, 469 U.S. 241, 246 (1985).
“[W]illful neglect” is interpreted as “a conscious, intentional
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