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affg. T.C. Memo. 1994-217; Turner v. Commissioner, T.C. Memo.
1995-363. In this regard, the determination of negligence is
highly factual.
In his testimony quoted above, petitioner indicated that he
spent very little time investigating the viability of an
investment in jojoba farming or the likely tax treatment of that
investment, relying on his experience in similar investments. He
offered in evidence at trial tax returns from earlier years on
which he had deducted various partnership losses. Among the
papers that he presented, however, was a decision where this
Court determined that he owed a deficiency and a negligence
addition to tax for 1981. Petitioner’s experience is not
persuasive evidence that he was qualified to assess the viability
and the proper treatment of the Cal-Neva partnership, relying
solely on the promoters. Based on the limited effort described
by petitioner and consistent with all opinions in similar cases,
we conclude that petitioners failed to exercise reasonable care
and are liable for the additions to tax for negligence.
Section 6661(a), as amended by the Omnibus Budget
Reconciliation Act of 1986, Pub. L. 99-509, sec. 8002, 100 Stat.
1951, provides for an addition to tax of 25 percent of the amount
of any underpayment attributable to a substantial understatement
of income tax for the taxable year. A substantial understatement
of income tax exists if the amount of the understatement exceeds
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