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Regs. Under section 6664(c), no penalty shall be imposed under
section 6662(a) with respect to any portion of an underpayment if
it is shown that there was a reasonable cause for such portion
and that the taxpayer acted in good faith with respect to such
portion. The determination of whether a taxpayer acted with
reasonable cause and in good faith depends upon the facts and
circumstances of each particular case. See sec. 1.6664-4(b)(1),
Income Tax Regs. Relevant factors include the taxpayer's efforts
to assess his or her proper tax liability, the knowledge and
experience of the taxpayer, and reliance on the advice of a
professional, such as an accountant. See Drummond v.
Commissioner, T.C. Memo. 1997-71. However, the most important
factor is the extent of the taxpayer's effort to determine the
taxpayer's proper tax liability. See sec. 1.6664-4(b)(1), Income
Tax Regs. 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.
Petitioner made an insufficient effort to determine his
proper tax liability for 1997 by submitting to respondent a
return that disavowed any income or any tax liability in spite of
the receipt by petitioner during the years of income payments
that, in previous years, petitioner had reported. There was no
reasonable or honest misunderstanding of fact or law by
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