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section 6662(a). A taxpayer must take reasonable steps to
determine the law and apply it. See id.
It is the taxpayer’s responsibility to establish that he or
she is not liable for the accuracy-related penalty imposed by
section 6662(a). See Rule 142(a); Tweeddale v. Commissioner, 92
T.C. 501, 505 (1989).
Mr. Cotton testified that petitioners’ tax preparers
fabricated several deductions, such as the Schedule C deductions
for a nonexistent plumbing business. Mr. Cotton was aware of
the inflated deductions, and he quarreled with his preparer
regarding the accuracy of the deductions. Petitioners
nevertheless filed the returns. The record does not indicate
that either petitioner took reasonable steps to properly report
the correct tax liability. On the basis of the entire record, we
conclude petitioners have not established that the underpayment
was due to reasonable cause or that either petitioner acted in
good faith. Accordingly, we hold each petitioner is liable for
the accuracy-related penalty.
To reflect the foregoing,
Decisions will be entered
under Rule 155.
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