-14-
have conceded this issue by not pursuing it on brief. See
Nicklaus v. Commissioner, 117 T.C. 117, 120 n.4 (2001); Rybak v.
Commissioner, 91 T.C. 524, 566 n.19 (1988).
IV. Accuracy-Related Penalty
We next consider whether petitioners are liable for the
accuracy-related penalty under section 6662(a) due to negligence
for each of the years at issue, as respondent determined.
Petitioners bear the burden of production as well as the burden
of proof with respect to the accuracy-related penalty because the
examination commenced before section 7491(c) became effective.
Rule 142(a); Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).
A taxpayer is liable for an accuracy-related penalty for any
part of an underpayment attributable to, among other things,
negligence or disregard of rules or regulations.5 Sec. 6662(a)
and (b)(1). Negligence is 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 by the taxpayer to keep
adequate books and records or to substantiate items properly.
Sec. 1.6662-3(b)(1), Income Tax Regs.
5Respondent determined in the alternative that petitioners
are liable for the accuracy-related penalty for substantial
understatements of income tax under sec. 6662(b)(2) for the years
at issue. Because of our holding on the negligence issue, we
need not consider whether the underpayments were also substantial
understatements.
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