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An exception applies to the accuracy-related penalty when
the taxpayer demonstrates (1) there was reasonable cause for the
underpayment, and (2) he acted in good faith with respect to such
underpayment. See sec. 6664(c). Whether the taxpayer acted with
reasonable cause and in good faith is determined by the relevant
facts and circumstances. The most important factor is the extent
of the taxpayer's effort to assess his or her proper tax
liability. See Stubblefield v. Commissioner, T.C. Memo. 1996-
537; sec. 1.6664-4(b)(1), Income Tax Regs. Section 1.6664-
4(b)(1), Income Tax Regs., specifically provides: "Circumstances
that may indicate reasonable cause and good faith include an
honest misunderstanding of fact or law that is reasonable in
light of * * * the experience, knowledge and education of the
taxpayer."
It is the taxpayer's burden to establish he is not liable
for the accuracy-related penalty imposed by section 6662(a). See
Rule 142(a); Tweeddale v. Commissioner, 92 T.C. 501, 505 (1989).
Petitioner claimed a loss carryover in the amount of $3,313,240
and a charitable contribution deduction in the amount of $2,024
in 1994 and failed to substantiate the claimed deduction under
the requirements of section 6001 and the applicable regulations.
Petitioner is an attorney with knowledge of the law. On the
basis of the entire record, we conclude that petitioners have not
established the underpayment was due to reasonable cause and that
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Last modified: May 25, 2011