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Accuracy-Related Penalty
Respondent determined that petitioners are liable for 1994
for the accuracy-related penalty under section 6662(a) because
their underpayment of tax for that year was due to negligence or
disregard of rules or regulations under section 6662(b)(1). For
purposes of section 6662(a), the term "negligence" includes any
failure to make a reasonable attempt to comply with the provi-
sions of the Code. Sec. 6662(c). Negligence also includes any
failure by the taxpayer to keep adequate books and records or to
substantiate items properly. Sec. 1.6662-3(b), Income Tax Regs.
The term "disregard" includes any careless, reckless, or inten-
tional disregard. Sec. 6662(c).
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 such portion and that the taxpayer acted
in good faith. 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)(1), Income Tax Regs. The most important factor is the
extent of the taxpayer's efforts to assess his or her proper tax
liability. Id.
In support of petitioners' position that they are not liable
for 1994 for the accuracy-related penalty, Mr. Blythe testified
that he "did the best that * * * [he] could" in preparing peti-
tioners' 1994 return. On the record before us, we find that
petitioners failed to show that they acted with reasonable cause
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