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the taxpayer acted in good faith. Petitioners have the burden of
persuading the Court that in refusing to waive this addition to
tax, respondent has exercised this discretion "arbitrarily,
capriciously, or without sound basis in fact." Mailman v.
Commissioner, 91 T.C. 1079, 1084 (1988). In determining whether
petitioners had reasonable cause and acted in good faith, the
Court primarily looks to the extent of the taxpayers' efforts to
assess their proper tax liability. Id. at 1084; sec. 1.6661-6(b),
Income Tax Regs.
Petitioners attempt to blame their accountant for all their
underreporting. The cause of petitioners' problems is an absence
of record keeping and an unexplained failure to provide even the
most basic documentary evidence, such as canceled checks, Forms
1098, invoices, and promissory notes. These shortcomings are not
the fault of petitioners' accountant; he was not hired to perform
these services. Dr. Rao testified that he did not even examine
the tax returns before signing them; he cannot now claim that
such action is reasonable and in good faith. We hold that the
Commissioner did not abuse her discretion in not waiving the
substantial understatement addition to tax under section 6661.
5. Negligence
For 1986 and 1987, section 6653(a)(1)(A) generally imposes
an addition to tax equal to 5 percent of the entire underpayment
if any part of it was due to negligence or disregard of rules or
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