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exceeds the greater of 10 percent of the tax required to be shown
in the return or $5,000. Sec. 6662(d)(1)(A). An understatement
of income tax is equal to the amount of tax required to be shown
in the return less the amount shown therein (reduced by any
rebate within the meaning of section 6211(b)(2)). Sec.
6662(d)(2)(A).
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for, 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 depends upon the pertinent facts and circum-
stances, including the taxpayer's efforts to assess his or her
proper tax liability and the knowledge and experience of the
taxpayer. Sec. 1.6664-4(b)(1), Income Tax Regs.
Respondent determined that petitioner's substantial under-
statement of income tax (1) for 1989 and 1990 is attributable to
the $3,000 capital loss deduction and the charitable contribution
deduction claimed by petitioner for each of those years and
(2) for 1991 is attributable to those claimed deductions as well
as the $7,633 deduction for wages and salaries that petitioner
claimed in his 1991 Schedule E.
With respect to the $3,000 capital loss deduction that
petitioner claimed for each of the years at issue, respondent
concedes that petitioner is entitled to treat the October 5 and
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