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Section 6662 Penalty
Respondent determined that petitioner is liable for the
section 6662(a) penalty for 1989. Section 6662(a) imposes an
accuracy-related penalty in an amount equal to 20 percent of the
underpayment of tax attributable to one or more of the items set
forth in section 6662(b). On brief, respondent argues that the
determination of the section 6662(a) penalty should be sustained
because petitioner's underpayment was due to negligence or due to
a substantial understatement. Sec. 6662(b)(1) and (2). The
deficiency here determined is a substantial understatement. See
sec. 6662(d)(1).
The accuracy-related penalty does not apply with respect to
any portion of an underpayment if it is shown that there was
reasonable cause for such portion of an underpayment and that
petitioner acted in good faith with respect to such portion.
Sec. 6664(c)(1). The determination of whether petitioner acted
with reasonable cause and in good faith depends upon the
pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income
Tax Regs. The most important factor is the extent of the
taxpayer's effort to assess his or her proper tax liability for
the year. Id. Reliance by the taxpayer on the advice of a
qualified adviser will constitute reasonable cause and good faith
if, under all of the facts and circumstances, the reliance by the
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