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reasonable cause and in good faith. Sec. 6664(c)(1); see Higbee
v. Commissioner, supra at 448-449; sec. 1.6664-4(b)(1), Income
Tax Regs.
This Court has held that the Commissioner may satisfy his
burden of production for the accuracy-related penalty based on
negligence by showing that the taxpayer failed to keep adequate
books and records or to properly substantiate items in question.
E.g., Higbee v. Commissioner, supra at 449. This Court has also
held that the Commissioner may satisfy his burden of production
for the accuracy-related penalty based on substantial
understatement of income tax by showing that the understatement
on the taxpayer’s return satisfies the definition of
“substantial”. E.g., Janis v. Commissioner, T.C. Memo. 2004-117.
Given the minimal amount of tax reported by petitioner on
his returns as compared with: (1) The magnitude of the
adjustments made by respondent in the notice of deficiency, (2)
the relatively modest concessions made by respondent at trial,
and (3) our holdings herein on the substantive issues for
decision, it would appear virtually certain that there are
substantial understatements of income tax for 1999 and 2000.
However, even if we were to leave that matter to the parties as
part of their computation for entry of decision under Rule 155,
we would hold that respondent satisfied his burden of production
by showing that petitioner failed to maintain complete and
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