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to be shown on a return, there shall be added to the tax an
amount equal to 20 percent of the portion of the underpayment to
which [section 6662] applies.” As relevant here, section 6662
applies to the portion of any underpayment that is attributable
to negligence or disregard of the rules or regulations. Sec.
6662(b)(1). The term “negligence” includes any failure to make a
reasonable attempt to comply with the provisions of the internal
revenue laws or to exercise ordinary and reasonable care in the
preparation of a tax return. Sec. 6662(c); Gowni v.
Commissioner, T.C. Memo. 2004-154. The term “disregard” includes
any careless, reckless, or intentional disregard. Sec. 6662(c).
Under section 6664, an exception is provided to the imposition of
a section 6662 accuracy-related penalty where a taxpayer
establishes that there was reasonable cause for the
understatement and that the taxpayer acted in good faith. Sec.
6664(c)(1). 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 pertinent facts and circumstances.
Generally, the most important factor is the extent of the
taxpayer's effort to assess the proper tax liability. Sec.
1.6664-4(b)(1), Income Tax Regs.
We have concluded that petitioners were required to report
as gross income the amounts received as reimbursements of
petitioner’s substantiated expenses and in exchange for
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