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T.C. 934, 947 (1985). The penalty, however, is not imposed with
respect to any portion of an underpayment for which there was
reasonable cause and a taxpayer acted in good faith. See sec.
6664(c)(1).
On brief, respondent asserts that the only adjustments to
which the negligence penalty applies are unreported interest and
dividend income in the amounts of $1,996 and $3,488,
respectively, and the amounts of $6,621 and $331,697, which are
flow-through items from HGTG’s bankruptcy estate. With respect
to the interest and dividend items, petitioner conceded that the
amounts were unreported, and he poses no defense with respect to
his failure to report the same. With respect to the flow-through
items from HGTG’s bankruptcy estate, petitioner contends that he
reasonably relied on his accountant, Gammon. Reasonable cause
can be established if a taxpayer can show reasonable reliance on
the advice of a competent and experienced accountant who prepared
the return. See Weis v. Commissioner, 94 T.C. 473, 487 (1990).
Gammon had prepared petitioner’s and petitioner’s business
entities’ Federal income tax returns for almost 10 years at the
time of the preparation of petitioner’s 1994 Federal income tax
return. Gammon was familiar with petitioner’s business and
financial matters. Gammon had prepared HGTG’s returns and was
familiar with its financial condition through the time that HGTG
went into bankruptcy. After HGTG was in bankruptcy, Gammon was
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