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without published opinion 155 F.3d 558 (4th Cir. 1998). However,
the most important factor is the extent of the taxpayer's effort
to determine the taxpayer's proper tax liability. See sec.
1.6664-4(b)(1), Income Tax Regs. An honest misunderstanding of
fact or law that is reasonable in light of the experience,
knowledge, and education of the taxpayer may indicate reasonable
cause and good faith. See Remy v. Commissioner, T.C. Memo. 1997-
72.
In the notice of deficiency, respondent applied the section
6662(a) penalty to all adjustments for 1991, 1992, and 1993. For
all 3 years, the underpayments resulted from respondent's
adjustments to the income and expenses of Klyce Day Care, Sweets
'N' Things, Special Occasions, and Special O.
On this record, the Court finds that petitioner negligently
or intentionally disregarded rules or regulations with regard to
the adjustments in the notice of deficiency for 1991, 1992, and
1993. Petitioner did not exercise due care in maintaining
adequate records of her income and expenses. As to two of the
activities in which petitioner was engaged, her books and records
were so inaccurate that respondent was compelled to use an
indirect means of determining what her gross income was. Very
few of petitioner's claimed expenses were substantiated. Some of
her expenses were for personal purposes. Accordingly, the
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