Daniel R. Blodgett - Page 8




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          reasonable cause for the underpayment and that the taxpayer acted           
          in good faith.  The determination of whether a taxpayer acted               
          with reasonable cause and in good faith depends upon the facts              
          and circumstances.  See sec. 1.6664-4(b)(1), Income Tax Regs.               
          Reliance on the advice of an accountant may demonstrate                     
          reasonable cause and good faith.  See id.                                   
               Respondent concedes that petitioner is not liable for the              
          1994 accuracy-related penalty, but contends that “petitioner has            
          failed to substantiate even a third of the expenditures at issue            
          in this case.”  We conclude that petitioner reasonably and in               
          good faith relied on his accountants.  Accordingly, he is not               
          liable for the 1995 and 1996 accuracy-related penalties.                    
               Contentions we have not addressed are moot, irrelevant, or             
          meritless.                                                                  
               To reflect the foregoing,                                              


                                                  Decision will be entered            
                                             under Rule 155.                          

















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