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to disregard of rules and regulations. For purposes of section
6662(a), negligence consists of a failure to make a reasonable
attempt to comply with the Code. See sec. 6662(c).
Accuracy-related penalties under section 6662(a) do not
apply to any part of an underpayment if the taxpayer shows
reasonable cause and if the taxpayer acted in good faith. See
sec. 6664(c). Whether a taxpayer acted with reasonable cause and
in good faith is ascertained on a case-by-case basis, taking into
account all of the pertinent facts and circumstances. See sec.
1.6664-4(b)(1), Income Tax Regs.
Circumstances that may establish reasonable cause and good
faith include an honest misunderstanding of fact or law that is
reasonable in light of the experience, knowledge, and education
of the taxpayer. See id.
With regard to the penalties under section 6662(a) for 1994
and 1996, the parties make no argument regarding the burden of
proof or the burden of production. See sec. 7491(c).
Because of petitioner’s education and professional
experience, and because the agreement adequately identified the
payments in question as interest, petitioner knew or should have
known that the payments constituted interest income and were
includable in her Federal income tax returns.
We conclude that petitioner is liable for the accuracy-
related penalties.
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Last modified: May 25, 2011