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circumstances. See Neely v. Commissioner, 85 T.C. 934, 947
(1985). The term “disregard” includes any careless, reckless, or
intentional disregard. Sec. 6662(c). A disregard of rules or
regulations is “careless” if the taxpayer does not exercise
reasonable diligence to determine the correctness of a return
position that is contrary to the rule or regulation. Sec.
1.6662-3(b)(2), Income Tax Regs. A taxpayer is not liable for
the penalty if he shows that there was reasonable cause for the
underpayment and that he acted in good faith. See sec. 6664(c).
From the record before us here, we find that petitioner was
negligent with respect to whether petitioner was entitled to
exclude tax certificate interest under section 103. Petitioner
is a certified public accountant. In spite of his experience and
knowledge, petitioner took a position on his 1994 Federal income
tax return that was contrary to case law. Long before petitioner
filed his Federal income tax return for 1994, this Court had
issued an opinion directly on point, Barrow v. Commissioner, T.C.
Memo. 1983-123. In Barrow v. Commissioner, supra, we decided
that interest income from tax certificates identical to the tax
certificates purchased by petitioner was not tax exempt.
With regard to petitioner’s failure to report tax
certificate interest income, which he contends is allocable to
other individuals, we find that petitioner did not produce
credible evidence that such interest income was attributable to
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