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Respondent also determined that petitioner was liable for a
penalty under section 6662(a) because he substantially
understated his Federal income tax. See sec. 6662(b)(2). As
relevant herein, section 6662(a) imposes an accuracy-related
penalty equal to 20 percent of an underpayment that is due to a
substantial understatement of income tax. An individual
substantially understates his or her income tax when the reported
tax is understated by the greater of 10 percent of the tax
required to be shown on the return or $5,000. Sec.
6662(d)(1)(A). Tax is not understated to the extent that the
treatment of the item related thereto is based on substantial
authority or is adequately disclosed in the return or in a
statement attached to the return. Sec. 6662(d)(2)(B).
Section 6662's accuracy-related penalty does not apply to
any portion of an underpayment to the extent that an individual
has reasonable cause for that portion and he or she acts in good
faith with respect thereto. Sec. 6664(c)(1). Such a
determination is made by taking into account all facts and
circumstances, including the experience and knowledge of the
taxpayer and his or her reliance on a professional tax adviser.
Sec. 1.6664-4(b)(1), Income Tax Regs.
We hold that petitioner is not liable for the penalty in
dispute. Petitioner relied reasonably on his C.P.A. to report
correctly the subject sale. Petitioner met with the C.P.A.
beforehand to discuss the facts surrounding the sale, and the
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