Roy W. and Sharon P. Oswandel - Page 10




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               Respondent determined that petitioners are liable for                  
          accuracy-related penalties under section 6662(a) and (b)(1) for             
          2000 and 2001.  Section 6662(a) imposes an accuracy-related                 
          penalty equal to 20 percent of the portion of an underpayment               
          that is attributable to, among other things, negligence.                    
          Petitioners will avoid this accuracy-related penalty if the                 
          record shows that they were not negligent; i.e., they made a                
          reasonable attempt to comply with the provisions of the Code, and           
          they were not careless, reckless, or in intentional disregard of            
          rules or regulations.  See sec. 6662(c); Keeler v. Commissioner,            
          243 F.3d 1212, 1221 (10th Cir. 2001), affg. Leema Enters. Inc. v.           
          Commissioner, T.C. Memo. 1999-18.  Negligence connotes a lack of            
          due care or failure to do what a reasonable and prudent person              
          would do under the circumstances.  See Allen v. Commissioner, 92            
          T.C. 1 (1989), affd. 925 F.2d 348 (9th Cir. 1991); Neely v.                 
          Commissioner, 85 T.C. 934, 947 (1985).  An accuracy-related                 
          penalty is not applicable to any portion of an underpayment to              
          the extent that an individual has reasonable cause for that                 
          portion and acts in good faith with respect thereto.  See sec.              
          6664(c)(1).                                                                 


               5(...continued)                                                        
          we note it does not apply to this case.  Under the Cohan rule,              
          the Court can estimate the amount of certain deductible expenses,           
          but only if the taxpayer presents sufficient evidence to make               
          those estimates.  See id. at 543-544.  Petitioners have not                 
          presented sufficient evidence for us to apply the Cohan rule.               






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