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“Disregard” has been categorized as any careless, reckless, or
intentional disregard. Sec. 6662(c).
A taxpayer may avoid the accuracy-related penalty by showing
that (1) there was reasonable cause for the underpayment, and (2)
the taxpayer acted in good faith with respect to such
underpayment. See sec. 6664(c). Whether the taxpayer acted with
reasonable cause and in good faith is determined by the relevant
facts and circumstances, and, most importantly, the extent to
which he attempted to assess his proper tax liability. See Neely
v. Commissioner, 85 T.C. 934 (1985); Stubblefield v.
Commissioner, T.C. Memo. 1996-537; sec. 1.6664-4(b)(1), Income
Tax Regs.
It is petitioners’ responsibility to establish that they are
not liable for the accuracy-related negligence penalty imposed by
section 6662(a). See Rule 142(a); Tweeddale v. Commissioner, 92
T.C. 501, 505 (1989).
At trial, petitioners made no argument and offered
absolutely no evidence to refute imposition of the section 6662
penalty. Further, petitioners failed to establish that they
acted with reasonable care and in good faith with respect to the
1993 underpayment.
Petitioners claimed various Schedule C deductions which they
were unable to substantiate and disregarded the requirements of
sections 162 and 274. Additionally, petitioners failed to keep
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