- 23 -
Fox v. Commissioner, 50 T.C. at 822. We have considered
petitioners' remaining arguments and find them to be without
merit. Accordingly, we hold that petitioners have failed to
prove that the note became worthless during 1990.
The final issue we consider is whether petitioners are
liable for the accuracy-related penalty provided by section
6662(a). Section 6662(a) imposes a 20-percent penalty on the
portion of an underpayment of tax that is attributable to, inter
alia, negligence or disregard of rules or regulations. The term
“negligence” includes any failure to make a reasonable attempt to
comply with the provisions of the Code, including failure to
exercise due care, failure to do what a reasonable person would
do under the circumstances, or failure to keep adequate books and
records. Sec. 6662(a); sec. 1.6662-3(b)(1), Income Tax Regs.
The term “disregard” includes any careless, reckless, or
intentional disregard of the Code or the temporary and final
regulations issued pursuant to the Code. Sec. 6662(c); sec.
1.6662-3(b)(2), Income Tax Regs.
The accuracy-related penalty does not apply to any portion
of an underpayment with respect to which it is shown that there
was a reasonable cause and that the taxpayer acted in good faith.
Sec. 6664(c)(1). The decision as to whether the taxpayer acted
with reasonable cause and in good faith depends upon all
pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income
Tax Regs. Generally, the most important factor is the extent of
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