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circumstances). The term “disregard” includes “any careless,
reckless, or intentional disregard.” Sec. 6662(c). 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. Disregard of rules or
regulations is reckless if the taxpayer makes little or no effort
to determine whether a rule or regulation exists. Id. Disregard
of rules or regulations is intentional if the taxpayer knows of
the rule or regulation that is disregarded. Id. Petitioners
have the burden of proving that respondent’s determination is
erroneous and that they did what reasonably prudent people would
have done under the circumstances. Rule 142(a); Bixby v.
Commissioner, 58 T.C. 757, 791 (1972).
Petitioners’ sole defenses to respondent’s determination are
that (1) they did not underpay their tax, and, alternatively, (2)
they acted with reasonable cause and in good faith with respect
to the underpayment. We must sustain respondent’s determination.
We have already decided whether the Cordeses underpaid their
taxes for the taxable years before us. To the extent the Rule
155 computation discloses an underpayment as defined in section
6664(a), the Cordeses’ argument fails. In addition, the evidence
does not demonstrate that the Cordeses relied on Robert Hinman25
25The Cordeses also purportedly relied on Revenue Agent Ken
McGee’s advice. We reject their claim because it is not
credible.
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