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petitioner’s expenditures (helmet, jacket, etc.) would relate to
a hobby as well as a business activity.
In sum, we do not find that petitioner’s motorcycle activity
constituted a trade or business entered into for profit.
B. Negligence
Section 6662(a) provides that, if the section applies, there
is imposed a penalty in an amount equal to 20 percent of the
portion of the underpayment. The penalty applies, inter alia, to
an underpayment due to negligence or disregard of the rules or
regulations. Sec. 6662(b)(1). The term “disregard” includes
“any careless, reckless, or intentional disregard.” Sec.
6662(c). Negligence includes “any failure to make a reasonable
attempt to comply”. Id.
We focus on whether petitioner was negligent in deducting
expenses of his motorcycle activity on his tax return.
Petitioner launched into this activity with little, if any,
experience in running a business to teach others to operate
motorcycles. He had no financial idea of how he could get
customers in sufficient number to meet the expenses of starting
and operating such a business, and he maintained no meaningful
records. Petitioner used a tax return preparer, but there is no
indication that the return preparer was competent. On the other
hand, petitioner had ridden motorcycles for many years as a
hobby, albeit perhaps of a different nature. Petitioner has not
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