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taxpayer converted the property to income-producing purposes.
Id.
We conclude that petitioners have failed to establish that
they converted their former residence, the Belair property, to
income-producing purposes. Accordingly, the loss on its sale is
not deductible under section 165.
II. Section 6662(a)
Pursuant to section 6662(a), a taxpayer may be liable for a
penalty of 20 percent on the portion of an underpayment of tax
(1) attributable to a substantial understatement of tax or (2)
due to negligence or disregard of rules or regulations. Sec.
6662(b). Whether applied because of a substantial understatement
of tax or negligence or disregard of the rules or regulations,
the accuracy-related penalty is not imposed with respect to any
portion of the understatement as to which the taxpayer acted with
reasonable cause and in good faith. Sec. 6664(c)(1). The
decision as to whether the taxpayer acted with reasonable cause
and in good faith depends upon all the pertinent facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs.
Reasonable and good faith reliance on the advice of an
accountant may offer relief from the imposition of the penalty.
Id.; United States v. Boyle, 469 U.S. 241, 250-251 (1985).
Petitioners agree with respondent that they reported the $499.98
on the wrong schedule; however, petitioners’ accountant was the
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