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proper tax liability, including the taxpayer’s reasonable and
good-faith reliance on the advice of a professional such as an
accountant. See id. Further, an honest misunderstanding of fact
or law that is reasonable in light of the experience, knowledge,
and education of the taxpayer may indicate reasonable cause and
good-faith. See Remy v. Commissioner, T.C. Memo. 1997-72.
Petitioners’ tax adviser testified at trial that he reviewed
the pleadings in petitioner’s lawsuit, the final settlement
agreement, and the applicable tax law and discussed petitioner’s
lawsuit with Mr. Simon and petitioner before recommending to
petitioners that the settlement proceeds were excludable under
section 104(a)(2). The tax adviser made the recommendation
around the time of the final settlement agreement and the filing
of petitioners’ 1995 tax return. After reviewing the entire
record, we find petitioners' reliance on their tax adviser
reasonable and in good-faith, and we conclude that the accuracy-
related penalty should not be imposed in this case.
In reaching our holdings herein, we have considered all
arguments made, and to the extent not mentioned above, we find
them to be irrelevant or without merit.
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