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Furthermore, the participation by petitioner and by other
creditors of TMC in the bankruptcy litigation in 1995 with regard
to the status of the promissory notes from TMC is indicative that
the $100,000 TMC promissory note did not become worthless at the
end of 1994.
The evidence before us fails to establish that the $100,000
TMC promissory note was worthless as of the end of 1994.
Under section 6662, an accuracy-related penalty of 20
percent is imposed on any portion of an understatement of tax
attributable to negligence or to disregard of Federal rules or
regulations. For purposes of section 6662(a), negligence
constitutes a failure to make a reasonable attempt to comply with
the Internal Revenue Code. Sec. 6662(c).
The penalty under section 6662(a) does not apply to any part
of an underpayment if the taxpayer shows reasonable cause and if
the taxpayer acted in good faith with regard to the items giving
rise to the underpayment. Sec. 6664(c)(1). Reasonable cause may
be indicated by reliance in good faith on the advice of a tax
professional. United States v. Boyle, 469 U.S. 241, 250 (1985).
Based on the limited facts before us in this case, we
conclude that petitioner is not liable for the accuracy-related
penalty under section 6662.
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