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burden of production is met, the taxpayer must come forward with
sufficient evidence that the penalty does not apply. Id. at 447.
Petitioner reported a tax liability of $16,854 on her 2000
tax return. Respondent determined that petitioner’s corrected
tax liability was $24,971. The difference is fully attributable
to petitioner’s omission of the additional tax under section
72(t) of $8,117. Respondent has satisfied his burden by showing
that the understatement of tax exceeds the greater of 10 percent
of the tax required to be shown on the return or $5,000.
The accuracy-related penalty is not imposed, however, with
respect to any portion of the understatement if petitioner can
establish that she acted with reasonable cause and in good faith.
Sec. 6664(c)(1). The decision as to whether the taxpayer acted
with reasonable cause and in good faith depends upon all the
pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income
Tax Regs. Circumstances that may indicate that a taxpayer acted
with reasonable cause and in good faith include “an honest
misunderstanding of fact or law that is reasonable in light of
all of the facts and circumstances, including the experience,
knowledge, and education of the taxpayer.” Id.
It is clear to the Court that petitioner is unsophisticated
as to tax matters. After providing her tax preparer with her tax
information, she relied reasonably and in good faith on the tax
preparer to prepare an accurate tax return. We conclude that
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Last modified: May 25, 2011