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professional, such as an accountant. Drummond v. Commissioner,
T.C. Memo. 1997-71. The most important factor is the extent of
the taxpayer's effort to determine the taxpayer's proper tax
liability. Sec. 1.6664-4(b)(1), Income Tax Regs. An honest
misunderstanding of fact or law that is reasonable in light of
the experience, knowledge, and education of the taxpayer may
indicate reasonable cause and good faith. Remy v. Commissioner,
T.C. Memo. 1997-72.
While the Court sympathizes with petitioners and understands
the difficulties, financial and otherwise, they encountered from
the termination of petitioner's employment with Berkeley, such
difficulties do not constitute reasonable cause for an
understatement of Federal income tax within the meaning of
section 6664(c). The record reflects that petitioners failed to
make a sufficient effort to determine their proper tax liability
for 1997. They failed to include several retirement account
distributions in their 1997 income and claimed a $300,000
casualty or theft loss for termination of an employer-sponsored
term life insurance policy, despite the fact that there existed
no precedent for any such tax treatment. Even assuming that
petitioners acted in good faith, the requirements of the Internal
Revenue Code have not been met in this case because petitioners
failed to make a showing that there was a reasonable cause for
their understatement of income as required by section 6664(c).
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