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negligence or intentional disregard of rules or regulations
(without distinction, negligence), any substantial understatement
of income tax, or any substantial valuation misstatement.
Respondent determined the accuracy-related penalty against
petitioner. Although the notice indicates that respondent
determined such penalty upon “one or more” of the three grounds
described for such penalty, the issue presented by this case and
our resolution thereof demonstrate that the only possible ground
for imposition of the penalty is negligence. Negligence has been
defined as lack of due care or failure to do what a reasonable
and prudent person would do under like circumstances. See, e.g.,
Hofstetter v. Commissioner, 98 T.C. 695, 704 (1992). Section
6664(c)(1) provides that the accuracy-related penalty shall not
be imposed with respect to any portion of an underpayment if it
is shown that the taxpayer acted in good faith and that there was
reasonable cause for the underpayment. The determination of
whether a taxpayer acted in good faith and with reasonable cause
is made on a case-by-case basis, taking into account all
pertinent facts and circumstances. “Circumstances that may
indicate reasonable cause and good faith include an honest
misunderstanding of * * * law that is reasonable in light of all
the facts and circumstances, including the experience, knowledge
and education of the taxpayer.” Sec. 1.6664-4(b)(1), Income Tax
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