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by petitioner for a contrary holding as to this issue. We also
disagree with petitioner’s reading of the above quoted provision
of its articles of incorporation to impose upon its board a short
time to redeem a shareholder’s stock should the board desire to
do so. We read nothing in the quoted provision that sets a time
limitation on the board’s ability to redeem stock.
3. Accuracy-Related Penalties
Respondent determined that petitioner was liable for
accuracy-related penalties under section 6662(a) and (b)(1) for
negligence or intentional disregard of rules and regulations.
Petitioner argues that it is not liable for these penalties
because it relied reasonably on its accountants’ advice in
preparing its returns. We agree with petitioner.
As relevant herein, section 6662(a) and (b)(1) imposes a
20-percent accuracy-related penalty on the portion of an
underpayment that is due to negligence or intentional disregard
of rules or regulations. Negligence includes a failure to
attempt reasonably to comply with the Code. Sec. 6662(c).
Disregard includes a careless, reckless, or intentional
disregard. Id.
A section 6662(a) accuracy-related penalty shall not be
imposed to the extent that the taxpayer shows that an
underpayment is due to the taxpayer’s having reasonable cause and
acting in good faith. Sec. 6664(c); secs. 1.6662-3(a),
1.6664-4(a), Income Tax Regs. Reasonable cause requires that the
taxpayer have exercised ordinary business care and prudence as to
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