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relevant facts were adequately disclosed on the taxpayer’s return
or an attached statement and there existed a reasonable basis for
the taxpayer’s treatment of the item. See sec. 6662(d)(2)(B).
An exception to the section 6662(a) penalty is set forth in
section 6664(c)(1) and reads: “No penalty shall be imposed under
this part with respect to any portion of an underpayment if it is
shown that there was a reasonable cause for such portion and that
the taxpayer acted in good faith with respect to such portion.”
Regulations interpreting section 6664(c) state:
The determination of whether a taxpayer acted with
reasonable cause and in good faith is made on a case-
by-case basis, taking into account all pertinent facts
and circumstances. * * * Generally, the most important
factor is the extent of the taxpayer’s effort to assess
the taxpayer’s proper tax liability. * * * [Sec.
1.6664-4(b)(1), Income Tax Regs.]
Furthermore, reliance upon the advice of an expert tax
preparer may, but does not necessarily, demonstrate reasonable
cause and good faith in the context of the section 6662(a)
penalty. See id.; see also Freytag v. Commissioner, supra at
888. Such reliance is not an absolute defense, but it is a
factor to be considered. See Freytag v. Commissioner, supra at
888. In order for this factor to be given dispositive weight,
the taxpayer claiming reliance on a professional must show, at
minimum, that (1) the preparer was supplied with correct
information and (2) the incorrect return was a result of the
preparer’s error. See, e.g., Westbrook v. Commissioner, 68 F.3d
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