Thomas B. Benham - Page 9

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                  The accuracy-related penalty will apply unless petitioner                            
            demonstrates that there was reasonable cause for the under-                                
            payment and that he acted in good faith with respect to the                                
            underpayment.  See sec. 6664(c).  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."                                  
            Whether a taxpayer acted with reasonable cause and good faith                              
            depends on the pertinent facts and circumstances.  See McCallson                           
            v. Commissioner, T.C. Memo. 1993-528; sec. 1.6664-4(b)(1), Income                          
            Tax Regs.  Petitioner must show that he was not negligent.  See                            
            Cluck v. Commissioner, 105 T.C. 324, 339 (1995).                                           
                  Petitioner explained at trial that he claimed on his return                          
            attorney's fees and other litigation costs associated with his                             
            divorce action as miscellaneous deductions based on his "literal                           
            reading" of section 212, governing expenses for the production of                          
            income.  He testified that he was in error when he made "an                                
            inadvertent computation" and deducted 1993 State taxes on his                              
            1994 Federal tax return.                                                                   
                  The record here shows that petitioner is a highly educated                           
            individual who has demonstrated some income tax knowledge.  We                             
            find it unreasonable that petitioner, an attorney, would                                   
            interpret "literally" a provision allowing the deduction of                                

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