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The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for, and that the taxpayer acted in good
faith with respect to, such portion. Sec. 6664(c)(1). The
determination of whether the taxpayer acted with reasonable cause
and in good faith depends on the pertinent facts and circum-
stances, including the taxpayer's efforts to assess his or her
proper tax liability, the knowledge and experience of the tax-
payer, and the reliance on the advice of a professional, such as
an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.
Petitioner argues that he was not negligent and did not
disregard rules or regulations. That is because, according to
petitioner, he relied upon the advice of Dina Caleda (Ms.
Caleda), a certified public accountant who prepared his return
for 1998, when he excluded from the gross income that he reported
in that return the wages that he received during that year while
he was residing and working in Johnston Island. A taxpayer
claiming reliance on an accountant (or other professional) must
show that the taxpayer supplied such accountant with all the
correct and necessary information and that the error in the
return was the result of the accountant’s error. Westbrook v.
Commissioner, 68 F.3d 868, 881 (5th Cir. 1995), affg. T.C. Memo.
1993-634; Weis v. Commissioner, 94 T.C. 473, 487 (1990); Ma-Tran
Corp. v. Commissioner, 70 T.C. 158, 173 (1978).
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Last modified: May 25, 2011