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evidence that Mr. Hansen knew, how these losses were derived; she
knew only that the Hoyt organization had reported the amounts on
the Schedules K-1 and on petitioners’ tax return. Petitioners
claimed these losses despite the fact that respondent had been
warning petitioners, at least since December 1988, that there
were potential problems with the tax claims being made on both
the partnership returns and on petitioners’ returns. Prior to
signing their 1991 return, petitioners had received at least 11
separate letters from respondent alerting petitioners to
suspected problems or alerting petitioners to reviews that had
been commenced with respect to various Hoyt partnerships in which
they were involved. Despite these letters, petitioners did not
further investigate the partnership losses, such as by consulting
an independent tax adviser, before claiming the losses as
deductions on their 1991 return. We conclude that petitioners
were negligent in 1991 in claiming the Hoyt partnership loss at
issue in this case; namely, the $32,306 loss from DSBS 87-C.
IV. Alleged Defenses to the Accuracy-Related Penalty
Section 6664(c)(1) provides that the section 6662(a)
accuracy-related penalty is not imposed “with respect to any
portion of an underpayment if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted in
good faith with respect to such portion.” “The determination of
whether a taxpayer acted with reasonable cause and in good faith
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