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OPINION
Our task is to determine the applicability of additions to
tax. Petitioners have the burden of proof. Because a remittance
petitioners made in December 1992 was repaid by Order of the
District Court of the Eastern District of Kentucky, there is a
related issue concerning the amounts of the deficiencies in income
tax to which the addition to tax under section 6653(a)(2) would
apply, if we determine that additions to tax under section
6653(a)(1) and (2) should apply at all.
Section 6653(a)(1) imposes an addition to tax equal to 5
percent of the underpayment if any part of the underpayment of tax
is due to negligence or intentional disregard of rules or
regulations. An additional amount is added under section
6653(a)(2), equal to 50 percent of the interest payable with
respect to the portion of the underpayment attributable to
negligence.
Negligence is defined as the failure to exercise the due care
that a reasonable and ordinarily prudent person would exercise
under the circumstances. Marcello v. Commissioner, 380 F.2d 499,
506 (5th Cir. 1967), affg. in part and remanding in part 43 T.C.
168 (1964) and T.C. Memo. 1964-299. The reasonableness of a
particular taxpayer’s actions is viewed in light of the taxpayer’s
experience, the nature of the investment, and the taxpayer’s
actions regarding the transaction. Henry Schwartz Corp. v.
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Last modified: November 10, 2007