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any expenses for the 2 years in question. We find that
petitioner is not entitled to any rental deductions.
Finally, we must decide whether petitioner is liable for the
accuracy-related penalties under section 6662(a). Section
6662(a) imposes a penalty of 20 percent on any portion of an
underpayment of tax that is attributable to negligence or
disregard of rules or regulations. Sec. 6662(a) and (b)(1).
Negligence includes any failure to make a reasonable attempt to
comply with the provisions of the Internal Revenue Code, and
disregard includes any careless, reckless, or intentional
disregard. Sec. 6662(c). Negligence also includes failure by
the taxpayer to keep adequate books and records or to
substantiate items properly. Sec. 1.6662-3(b)(1), Income Tax
Regs. The penalty does not apply, however, to any portion of an
underpayment for which there was reasonable cause and with
respect to which the taxpayer acted in good faith. Sec. 6664(c).
The determination of whether a taxpayer acted with reasonable
cause and in good faith is made on a case-by-case basis, taking
into consideration all of the relevant facts and circumstances.
Sec. 1.6664-4(b)(1), Income Tax Regs. Reasonable cause and good
faith can be found in circumstances involving an honest
misunderstanding of fact or law that is reasonable in light of
the experience, knowledge, and education of the taxpayer.
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