Donald DeCleene and Doris DeCleene - Page 32

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          accomplished fact of his purchase of the Lawrence Drive property.           
          Petitioners’ 1993 income tax return, prepared by petitioner’s               
          accountant, reported a taxable short-term gain of $5,373 on the             
          sale of “investment land” and reported a like-kind exchange of              
          “land and building” for “land and building” on Form 8824.  The              
          disclosures were bare bones but adequate to trigger the audit               
          that led to the deficiency notice and the case at hand.                     
               Respondent determined that petitioners were liable for an              
          accuracy-related penalty under section 6662(a) and (b)(1) or (2).           
          Section 6662(a) imposes a 20-percent accuracy-related penalty on            
          the portion of an underpayment that is due to one or more causes            
          enumerated in section 6662(b).  Respondent relies on subsections            
          (b)(1) (negligence or intentional disregard of rules or                     
          regulations) or (b)(2) (substantial understatement of income                
               Petitioners argue they are not liable for the penalty.                 
          Petitioners point out that a certified public accountant outlined           
          the subject transactions as they were carried out and prepared              
          their return and that the deal was structured and the papers                
          drawn by petitioners’ attorneys.  Petitioners contend that they             
          reasonably relied on professional advice in the preparation of              
          their return and that they are entitled to relief under the                 
          exceptions that apply to a substantial understatement.                      
               Negligence includes a failure to attempt reasonably to                 
          comply with the Code.  See sec. 6662(c).  Disregard includes a              

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