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In addition, this Court has been unwilling to permit
taxpayers to shift responsibility for inaccuracies to an agent in
circumstances where even a cursory review of the returns would
reveal substantial underreporting. See, e.g., Metra Chem Corp. v.
Commissioner, 88 T.C. 654, 662 (1987); Pritchett v. Commissioner,
63 T.C. 149, 175 (1974).
Applying these principles to the case at hand, we find that
petitioner’s return contained a substantial understatement, and
we need not reach the question of whether petitioner was also
negligent. Petitioner reported a tax owing of $10,756 and has
stipulated to an additional tax of $17,823 for 1995. The
understatement therefore exceeds both 10 percent of the total tax
(10 percent of $28,579 equals $2,857.90) and $5,000. Although
petitioner claims that the stipulation represents only a
settlement and does not establish or represent his agreement to
an understatement, we are unable to see how petitioner can
stipulate that he is liable for tax beyond that stated on his
return without also conceding that tax was understated on the
return.
Turning then to whether reasonable cause exists for this
inaccuracy, we conclude that petitioner has failed to prove facts
necessary to render reliance on his accountant exculpatory.
Petitioner testified that he provided hard copies of records
maintained by his in-house accounting software and, upon request,
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