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the years in issue.
Respondent determined that petitioner was liable for an
accuracy-related penalty, under section 6662(a) and (b)(1) or
(2), for negligence or intentional disregard of rules and
regulations or substantial understatement of income tax.
Petitioner argues that it is not so liable. Petitioner asserts
that a certified public accountant prepared its returns and
that the accountant had access to all of the materials now
before the Court. Petitioner argues that it reasonably relied
on professional advice in preparing its returns and therefore
should not be held liable for the accuracy-related penalty.
Section 6662(a) imposes a 20-percent accuracy-related
penalty on the portion of an underpayment that is due to one or
more of the causes enumerated in section 6662(b). Respondent
relies on subsections (b)(1) (negligence or intentional
disregard of rules or regulations) and/or (b)(2) (substantial
understatement of income tax).
Negligence includes a failure to attempt reasonably to
comply with the Code. See sec. 6662(c). Disregard includes a
careless, reckless, or intentional disregard. See id.
A substantial understatement of income tax is defined to
be the greater of 10 percent of the income tax required to be
shown on the return for the taxable year or $5,000. See sec.
6662(d). In the instant case $5,000 is the greater amount for
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