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Cir. 1996), affg. T.C. Memo. 1995-46. An understatement of
income tax is substantial if it exceeds 10 percent of the tax
required to be shown on the return for the taxable year or
$5,000, whichever is greater. Sec. 6662(d)(1)(A).3
As pertinent here, “negligence” includes the failure to make
a reasonable attempt to comply with the provisions of the
Internal Revenue Code and also includes any failure to keep
adequate books and records or to substantiate items properly.
Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. It is the
taxpayer’s responsibility to establish that he is 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).4 As we have held that petitioner failed to
comply with the basic requirements of substantiation and record-
keeping contained in the Internal Revenue Code, we find that
petitioner’s underpayment was due to negligence and is subject to
the accuracy-related penalty under section 6662(a).
A taxpayer may avoid the application of the accuracy-related
penalty by proving that he or she acted with reasonable cause and
in good faith. Sec. 6664(c). Whether a taxpayer acted with
reasonable cause and good faith is measured by examining the
3 We need not address whether petitioner’s understatement of
income was substantial because we hold that she is liable for the
accuracy-related penalty due to negligence.
4 See supra note 2.
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