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would do under the circumstances.’” Korshin v. Commissioner, 91
F.3d 670, 672 (4th Cir. 1996) (quoting Schrum v. Commissioner, 33
F.3d 426, 437 (4th Cir. 1994), affg. in part, vacating and
remanding in part T.C. Memo. 1993-124), affg. T.C. Memo. 1995-46.
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.
See sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. A
taxpayer may, however, avoid the application of the accuracy-
related penalty by proving that he or she acted with reasonable
cause and in good faith. See sec. 6664(c). Whether a taxpayer
acted with reasonable cause and in good faith is measured by
examining the relevant facts and circumstances, and most
importantly, the extent to which he or she attempted to assess
the 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.
Petitioner concedes he did not report Form 1099 income from
Capitol and Life USA in 1996. Additionally, we have found that
petitioner failed to maintain adequate records related to claimed
automobile and home office expenses. Therefore, we find the
underpayment due to the omitted Form 1099 income and the
disallowed Schedule C expenses to be attributable to negligence
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