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(2001). Once the Commissioner meets the burden of production,
the taxpayer must come forward with persuasive evidence that the
Commissioner’s determination is incorrect. Id. The taxpayer,
however, bears the burden of proving that he or she acted with
reasonable cause and in good faith. See sec. 6664(c)(1); see
also Higbee v. Commissioner, supra at 446; sec. 1.6664-4(b)(1),
Income Tax Regs.
Respondent satisfied his burden of production under
section 7491(a)(1) because the record demonstrates that
petitioner failed to report annuity income in the amount of
$24,146 and that the understatement was attributable to such
unreported income, which was substantial within the meaning of
section 6662(d)(1)(A)(ii). Accordingly, we hold that respondent
satisfied his burden of production for the accuracy-related
penalty based on both negligence or disregard of rules or
regulations and substantial understatement of income tax.
On the basis of the record, a prima facie case exists for
imposition of the penalty. Petitioner did not present any
evidence or make any showing that respondent’s determination was
in error. Moreover, petitioner did not have reasonable cause,
nor did he act in good faith with respect to the understatement
of income tax. Accordingly, we sustain respondent’s
determination on this issue.
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