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petitioner. Although the notice states that respondent bases his
imposition of the section 6662(a) accuracy-related penalty upon
“one or more” of the three grounds listed in section 6662(b)(1)-
(3), the issue presented by this case and our resolution thereof
demonstrates that the only possible ground for imposition of the
penalty is section 6662(b)(1), which imposes a penalty in the
amount of 20 percent of the portion of the underpayment that is
attributable to “negligence or disregard of rules or
regulations”. Negligence has been defined as lack of due care or
failure to do what a reasonable and prudent person would do under
like circumstances. See, e.g., Hofstetter v. Commissioner, 98
T.C. 695, 704 (1992). Section 6664(c)(1) provides that the
accuracy-related penalty shall not be imposed with respect to any
portion of an underpayment if it is shown that the taxpayer acted
in good faith and that there was reasonable cause for the
underpayment. The determination of whether a taxpayer acted in
good faith and with reasonable cause is made on a case-by-case
basis, taking into account all pertinent facts and circumstances.
“Circumstances that may indicate reasonable cause and good faith
include an honest misunderstanding of * * * law that is
reasonable in light of all of the facts and circumstances,
including the experience, knowledge, and education of the
taxpayer.” Sec. 1.6664-4(b)(1), Income Tax Regs.
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Last modified: May 25, 2011