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understatement penalty. Accordingly, petitioners must show that
the accuracy-related penalty should not be imposed with respect
to any portion of the understatement for which they acted with
reasonable cause and in good faith. See sec. 6664(c)(1); Higbee
v. Commissioner, supra at 448. The decision as to whether
petitioners acted with reasonable cause and in good faith is one
that depends on all the facts and circumstances. See sec.
1.6664-4(b)(1), Income Tax Regs. An honest misunderstanding of
fact or law that is reasonable in light of the experience,
knowledge, and education of the taxpayer may indicate reasonable
cause and good faith. See Higbee v. Commissioner, supra at 449
(citing Remy v. Commissioner, T.C. Memo. 1997-72).
Petitioner was a truck driver who was able to gradually
purchase more equipment and hire employees to drive the trucks.
Petitioner’s skills are in the trucking business. Petitioner
attempted to complete his own tax return for 1996. His confusion
as to how to properly complete the form is evidenced by his use
of Schedule D, which is used for reporting capital gains and
losses. Under section 1211(b), which applies to capital gains
and losses, petitioner would have been limited to a $3,000
deduction. Petitioner intended to claim a bad debt deduction of
$86,040.
Petitioner was forthright and fully disclosed the amount of
the business bad debt. Petitioner made an honest and good faith
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