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petitioner’s tools. Our resolution of the issues in this case
required careful examination of the relevant laws, trial
exhibits, and testimony. Petitioners’ omission of the
reimbursement income from IMC was made in good faith and with the
belief that the reimbursement arrangement would qualify as an
accountable plan. It was not unreasonable that petitioners did
not report any of the income, since the arrangement between
petitioner and Mr. Kerkinni provided that petitioner would not
receive any reportable wages from IMC, and petitioner did not
receive a Form W-2 for any of the years in issue. In addition,
petitioners’ failure to report the proceeds they received for
petitioner’s tools was a result of their belief that the payments
did not exceed petitioner’s basis in the tools. Based on the
information they had, petitioners made an effort to comply with
the tax laws in preparing their returns. Therefore, we conclude
that the accuracy-related penalty is not appropriate, and
petitioners are not liable for the penalty pursuant to section
6662.
To reflect the foregoing and concessions by respondent,
Decision will be entered
under Rule 155.
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