- 26 -
with an estate plan than an investment in a legitimate business.
Id. at 377; see also Estate of Rosen v. Commissioner, supra.
4. Accuracy-Related Penalty Under Section 6662
Section 6662(a) and (b)(1) imposes an accuracy-related
penalty equal to 20 percent of the portion of an underpayment
which is attributable to negligence or disregard of rules or
regulations. The term “negligence” includes any failure to make
a reasonable attempt to comply with the internal revenue laws or
to exercise ordinary and reasonable care in the preparation of a
tax return. See sec. 1.6662-3(b)(1), Income Tax Regs. The term
“disregard” includes any careless, reckless, or intentional
disregard of rules or regulations. See sec. 6662(c). Section
6664(c) provides that no penalty shall be imposed under section
6662 with respect to any portion of an underpayment if the
taxpayer can show that the taxpayer acted with reasonable cause
and in good faith.
Respondent determined that the estate was negligent in
failing to report the $595,000 of prior gifts as adjusted taxable
gifts on the estate’s Federal estate tax return. We agree.11
11 Neither party mentions the applicability of sec. 7491(c).
That section provides that the Commissioner has the burden of
production “in any court proceeding with respect to the liability
of any individual for any penalty, addition to tax, or additional
amount imposed by this title.” We need not decide whether sec.
7491(c) applies to estates because the record is sufficient to
(continued...)
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