- 15 -
underpayment respondent determined appears, on its face, to be a
“substantial understatement” within the meaning of section
6662(d)(1)), the only issue respondent raised on brief is whether
petitioner’s 1997 underpayment is attributable to “negligence or
disregard of rules or regulations.”7
Section 6662(c) defines the term “negligence”, for purposes
of section 6662, as including “any failure to make a reasonable
attempt to comply with the provisions of this title”, and the
term “disregard” as including “any careless, reckless, or
intentional disregard.” Negligence has been generally defined as
lack of due care or failure to do what a reasonably prudent
person would do under like circumstances. See, e.g., Hofstetter
v. Commissioner, 98 T.C. 695, 704 (1992). It “also includes any
failure by the taxpayer to keep adequate books and records or to
substantiate items properly.” Sec. 1.6662-3(b)(1), Income Tax
Regs.
Section 6664(c)(1) provides that the accuracy-related
penalty shall not be imposed with respect to any portion of an
underpayment if it is shown that there was reasonable cause for
that portion and the taxpayer acted in good faith with respect to
that portion.
7 Therefore, we consider respondent to have abandoned the
substantial understatement argument. See Bernstein v.
Commissioner, 22 T.C. 1146, 1152 (1954), affd. 230 F.2d 603 (2d
Cir. 1956); Lime Cola Co. v. Commissioner, 22 T.C. 593, 606
(1954); Roberts v. Commissioner, T.C. Memo. 1996-225.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011