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Schedule C gross receipts. Respondent did not determine that
petitioner is liable for the accuracy-related penalty with respect
to any other adjustment in the notice of deficiency.
Section 6662(a) imposes a 20-percent penalty on the portion
of an underpayment attributable to any one of various factors, one
of which is negligence or disregard of rules or regulations. Sec.
6662(b)(1). “Negligence” includes any failure to make a
reasonable attempt to comply with the provisions of the Internal
Revenue Code, including any failure to keep adequate books and
records or to substantiate items properly. Sec. 6662(c); sec.
1.6662-3(b)(1), Income Tax Regs. Section 6664(c)(1) provides that
the penalty under section 6662(a) shall not apply to any portion
of an underpayment if it is shown that there was reasonable cause
for the taxpayer’s position and that the taxpayer acted in good
faith with respect to that portion. The determination of whether
a taxpayer acted with reasonable cause and in good faith is made
on a case-by-case basis, taking into account all the pertinent
facts and circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs.
The most important factor is the extent of the taxpayer’s effort
to assess his proper tax liability for the year. Id.
It is clear that petitioner was negligent with respect to the
omission of the Schedule C income. Petitioner did not keep
adequate books and records or otherwise substantiate the amount of
income reported on his return, as required by the Internal Revenue
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