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failure to make a reasonable attempt to comply with the
provisions of the internal revenue laws, to exercise ordinary and
reasonable care in the preparation of a tax return, and to keep
adequate books and records or to substantiate items properly.
See sec. 1.6662-3(b)(1), Income Tax Regs. The term "disregard"
includes any careless, reckless, or intentional disregard of
rules or regulations. See sec. 6662(c).
The burden is on the taxpayer to prove the Commissioner's
imposition of the penalty is in error. See Betson v.
Commissioner, 802 F.2d 365, 372 (9th Cir. 1986), affg. in part
and revg. in part T.C. Memo. 1984-264; LaVerne v. Commissioner,
94 T.C. 637, 652 (1990), affd. without published opinion 956 F.2d
274 (9th Cir. 1992); Luman v. Commissioner, 79 T.C. 846, 860-861
(1982); Bixby v. Commissioner, 58 T.C. 757, 791 (1972). Except
for petitioner's testimony that he thought the insurance proceeds
were not taxable because they were compensation for the casualty
loss, petitioners did not address this issue at trial.
Section 6664(c)(1) provides that the penalty under section
6662(a) shall not apply to any portion of an underpayment if it
is shown that there was a reasonable cause for the taxpayer's
position with respect to that portion and that the taxpayer acted
in good faith with respect to that portion. See sec. 6664(c)(1).
The determination of whether a taxpayer acted with
reasonable cause and good faith within the meaning of section
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