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failure to keep adequate books and records or to substantiate
items properly. Sec. 6662(c); 1.6662-3(b)(1), Income Tax Regs.
“Disregard” consists of any careless, reckless, or intentional
disregard. Sec. 6662(c).
An exception applies to the accuracy-related penalty when
the taxpayer demonstrates (1) there was reasonable cause for the
underpayment, and (2) he acted in good faith with respect to such
underpayment. Sec. 6664(c). Whether the taxpayer acted with
reasonable cause and in good faith is determined by the relevant
facts and circumstances. The most important factor is the extent
of the taxpayer’s effort to assess his proper tax liability.
Stubblefield v. Commissioner, T.C. Memo. 1996-537; sec. 1.6664-
4(b)(1), Income Tax Regs. Section 1.6664-4(b)(1), Income Tax
Regs., specifically provides: “Circumstances that may indicate
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.”
Neely v. Commissioner, 85 T.C. 934 (1985).
It is the taxpayer’s responsibility to establish that he is
not liable for the accuracy-related penalty imposed by section
6662(a). Rule 142(a); Higbee v. Commissioner, supra; Tweeddale
v. Commissioner, 92 T.C. 501, 505 (1989). Petitioner did not
address this issue at trial or in any pleadings. Petitioner
claimed deductions that he failed to explain or substantiate.
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