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Respondent bears the burden of production under section
7491(c) and must come forward with sufficient evidence indicating
that it is appropriate to impose an accuracy-related penalty.
Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001). Once
respondent has met this burden, the taxpayer must come forward
with persuasive evidence that the accuracy-related penalty does
not apply. Id. The taxpayer may establish, for example, that
part or all of the accuracy-related penalty is inapplicable
because it is attributable to an understatement for which the
taxpayer acted with reasonable cause and in good faith. Sec.
6664(c)(1). Whether a taxpayer acted as such is a factual
determination, sec. 1.6664-4(b)(1), Income Tax Regs., for which
the taxpayer’s effort to assess the proper tax liability is a
very important consideration.
Here, petitioners concede that respondent has met his burden
of production in that the parties agree that the understatement
on petitioners’ return is “substantial” within the meaning of
section 6662(d)(1). Petitioners argue that they acted reasonably
as to the subject matter of the deficiency in that, they assert,
Hill relied reasonably upon his tax preparer to prepare
petitioners’ 1999 tax return correctly. Although reliance on the
advice of a professional as to the tax treatment of an item may
sometimes be enough to escape the imposition of a section 6662(a)
accuracy-related penalty, see United States v. Boyle, 469 U.S.
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