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Finally, we must decide whether accuracy-related penalties
are appropriate for any of the years in issue. Respondent
determined that petitioners are liable for section 6662 accuracy-
related penalties for 1989, 1990, and 1991. Section 6662(a)
imposes a penalty in an amount equal to 20 percent of the portion
of the underpayment of tax attributable to one or more of the
items set forth in subsection (b). Respondent asserts that the
section 6662(a) penalties for 1989, 1990, and 1991 were due to
negligence or disregard of rules or regulations and represent
substantial understatements of income tax. Sec. 6662(b)(1) and
(2).
The accuracy-related penalty does not apply with respect to
any portion of the underpayment if it is shown that there was
reasonable cause for such portion and that the taxpayer acted in
good faith with respect to such portion. Sec. 6664(c)(1). The
determination of whether a taxpayer acted with reasonable cause
and in good faith is made on a case-by-case basis, taking into
account all 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 proper tax
liability for the year. Id.
Petitioners contend that the accuracy-related penalties are
inappropriate in this case, because they relied on their
certified public accountant, Mr. Knutzen, to prepare their tax
returns accurately. Generally, the duty of filing accurate
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