Ralph W. Emerson and Suzanne O. Emerson - Page 19

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          petitioner was compensation under the services contract and is              
          subject to self-employment tax.                                             
          Accuracy-Related Penalty                                                    
               Respondent contends that petitioners are liable for an                 
          accuracy-related penalty under section 6662(a).  Respondent has             
          the burden of production under section 7491(c) and must come                
          forward with sufficient evidence that it is appropriate to impose           
          the penalty.  See Higbee v. Commissioner, 116 T.C. 438, 446-447             
               Under the narrow circumstances of this case, we hold that              
          petitioners are not liable for the accuracy-related penalty.                
          Petitioners relied on the suggestion of Judge Gilbert and on                
          their attorney’s advice to include a claim for personal injury.             
          Petitioner accepted less in settlement of his claims than he                
          hoped for, after a way to avoid tax on the proceeds was suggested           
          by Judge Gilbert.  Respondent does not contest the assertion that           
          Judge Gilbert suggested the form of the settlement agreement.               
          Petitioner was told that structuring the settlement to include a            
          claim for personal injury would relieve him of his tax liability.           
          Based on our review of the record, we conclude that petitioners             
          are not liable for the accuracy-related penalty imposed under               
          section 6662.                                                               

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