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amount of the marital deduction, the parties must consider (and not
reduce the marital deduction by) the amount of State transfer and
inheritance taxes actually and timely paid by reason of the bequest
of the class A voting stock to the trustees of the credit shelter
trust.
Issue 4. Penalties
The last issue is whether petitioner is liable for the
penalties determined by respondent pursuant to section 6662(a),
(g), (h)(1), and (2)(C).
A substantial estate tax valuation understatement occurs if
the value of property claimed on a return is 50 percent or less of
the amount determined to be its correct value, and the portion of
the underpayment attributable to the understatement exceeds $5,000.
See sec. 6662(g). The penalty equals 20 percent of the portion of
the underpayment attributable to the understatement. See sec.
6662(a). The penalty does not apply to any portion of the
underpayment for which the taxpayer shows that he or she: (1) Had
reasonable cause, and (2) acted in good faith with respect thereto.
See sec. 6664(c); see also United States v. Boyle, 469 U.S. 241,
242 (1985). Whether a taxpayer had reasonable cause and acted with
good faith is a factual determination. See sec. 1.6664-4(b),
Income Tax Regs. Reliance on the advice of a professional will
constitute good faith and reasonable cause where the reliance was
reasonable. See id.
Respondent argues that petitioner undervalued decedent's
shares of J.R. Simplot Co. Respondent further contends that
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