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one of which is negligence or disregard of rules or regulations.
Sec. 6662(b)(1). Respondent determined that petitioners are
liable for the accuracy-related penalty imposed by section
6662(a) for their underpayment of tax in 1992, and that such
underpayment was due to negligence or disregard of rules or
regulations. "Negligence" includes a failure to make a
reasonable attempt to comply with the provisions of the Internal
Revenue laws or to exercise ordinary and reasonable care in the
preparation of a tax return. Sec. 6662(c); sec. 1.6662-3(b)(1),
Income Tax Regs. "Disregard" includes any careless, reckless, or
intentional disregard of rules or regulations. Sec. 6662(c);
sec. 1.6662-3(b)(2), Income Tax Regs.
Section 6664(c)(1), however, provides that the penalty under
section 6662(a) shall not apply to any portion of an
underpayment, if it is shown that there was reasonable cause for
the taxpayer's position with respect to that portion of the
underpayment and that the taxpayer acted in good faith with
respect to that portion. 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.
Based on the record, we find that petitioners have not
proved that their underpayment was due to reasonable cause or
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