- 109 -
of the underpayment attributable to negligence or disregard of
rules or regulations, any substantial understatement of income
tax, or any substantial valuation overstatement. See sec.
6662(b)(1)-(3). The section 6662 accuracy-related penalty does
not apply with respect to any portion of an underpayment if
reasonable cause exists for the underpayment and the taxpayer
acted in good faith with respect to such portion. Sec.
6664(c)(1). The determination of whether the taxpayer acted with
reasonable cause and in good faith depends upon the pertinent
facts and circumstances. Sec. 1.6664-4(b), Income Tax Regs. The
most important factor in determining reasonable cause is the
extent of the taxpayer's effort to assess the proper tax
liability. Sec. 1.6664-4(b), Income Tax Regs.
In our judgment, Jacobs acted with reasonable cause and in
good faith when he claimed the charitable contribution deduction
for his donation of the Redwood City Fox. Accordingly, we hold
that he is not liable for the section 6662 accuracy-related
penalties for 1989 and 1990.
To reflect the foregoing,
Decisions will be entered
under Rule 155.
Page: Previous 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 Last modified: May 25, 2011