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reasonable cause and good faith depends upon all the pertinent
facts and circumstances. See sec. 1.6664-4(b)(1), Income Tax
Regs. Relevant factors include the taxpayer’s efforts to assess
his proper tax liability, including the taxpayer’s reasonable and
good faith reliance on the advice of a professional such as an
accountant. See id. Further, 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 Remy v. Commissioner, T.C. Memo. 1997-72; sec.
1.6664-4(b)(1) Income Tax Regs.
As discussed above, section 7491(c) imposes upon the
Commissioner the burden of production with regard to any penalty
or addition to tax, including the section 6662(a) penalty. Once
the Commissioner comes forward with sufficient evidence to
indicate that it is appropriate to impose the section 6662(a)
penalty, the taxpayer has the burden of proof in regard to
whether the taxpayer acted with reasonable cause and in good
faith under section 6664(c)(1). Higbee v. Commissioner, supra at
447; Emerson v. Commissioner, T.C. Memo. 2003-82.
In the notice of deficiency, respondent summarized his
calculations of petitioner’s underpayments of tax as follows:
(1) In 1997, respondent calculated an understatement of $25,731
on a tax liability of $71,354, or a 36-percent understatement,
(2) in 1998, respondent calculated an understatement of $16,709
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Last modified: May 25, 2011