- 33 -
careless, reckless, or intentional disregard. See id.
Negligence is the failure to exercise due care or the failure to
act as a reasonable and prudent person. See Neely v.
Commissioner, 85 T.C. 934, 947 (1985).
No penalty is imposed for negligence or intentional
disregard of rules or regulations or a substantial understatement
of income if the taxpayer shows that the underpayment is due to
reasonable cause and the taxpayer’s good faith. See sec.
6664(c); secs. 1.6662-3(a), l.6664-4(a), Income tax Regs.
Reasonable cause requires that the taxpayer have exercised
ordinary business care and prudence as to the disputed item. See
United States v. Boyle, 469 U.S. 241 (1985); see also Estate of
Young v. Commissioner, 110 T.C. 297, 317 (1998). The good faith,
reasonable reliance on the advice of an independent, competent
professional as to the tax treatment of an item may meet this
requirement. See United States v. Boyle, supra; sec. 1.6664-
4(b), Income Tax Regs.; see also Richardson v. Commissioner, 125
F.3d 551 (7th Cir. 1997), affg. T.C. Memo. 1995-554; Ewing v.
Commissioner, 91 T.C. 396, 423 (1988), affd. without published
opinion 940 F.2d 1534 (9th Cir. 1991).
Whether a taxpayer relies on advice and whether such
reliance is reasonable depend on the facts and circumstances of
the case and the law that applies to those facts and
circumstances. See sec. 1.6664-4(c)(i), Income Tax Regs. A
professional may render advice that may be relied upon reasonably
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