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shown in the tax return over the amount of tax shown in the tax
return, see sec. 6662(d)(2)(A), and is substantial in the case of
an individual if it exceeds the greater of 10 percent of the tax
required to be shown or $5,000, see sec. 6662(d)(1)(A).
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for such portion and that the taxpayer acted
in good faith. See sec. 6664(c)(1). The determination of
whether a taxpayer acted with reasonable cause and in good faith
depends on the pertinent facts and circumstances, including the
taxpayer’s efforts to assess his or her proper tax liability, the
knowledge and experience of the taxpayer, and the reliance on the
advice of a professional, such as an accountant. See sec.
1.6664-4(b)(1), Income Tax Regs. In the case of claimed reliance
on the accountant who prepared the taxpayer’s tax return, the
taxpayer must establish that correct information was provided to
the accountant and that the item incorrectly claimed or reported
in the return was the result of the accountant’s error. See Ma-
Tran Corp. v. Commissioner, 70 T.C. 158, 173 (1978).
Petitioners argue that there was no substantial understate-
ment of income tax for 1992 and that therefore they are not
liable for that penalty. As a result of our holding that peti-
tioners’ taxable income for 1992 is to be increased by $300,000,
we reject that argument.
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