- 21 -
D. Whether Petitioner Is Liable for Accuracy-Related
Penalties Under Section 6662(a)
Respondent determined that petitioner is liable for an
accuracy-related penalty under section 6662(a) with respect to
the underpayment attributable to petitioner’s claimed business
expenses. We disagree.
Respondent has the burden of production under section
7491(c) and must come forward with sufficient evidence that it is
appropriate to impose the penalty. See sec. 7491(c); Higbee v.
Commissioner, 116 T.C. 438, 446-447 (2001). The accuracy-related
penalty under section 6662(a) does not apply to any portion of an
underpayment, however, if it is shown that there was reasonable
cause for, and that the taxpayer acted in good faith with respect
to, that portion. Sec. 6664(c)(1); sec. 1.6664-4(b), Income Tax
Regs. The determination of whether the taxpayer acted with
reasonable cause and in good faith depends on the pertinent facts
and circumstances, including the taxpayer’s efforts to assess his
or her proper tax liability and the knowledge and experience of
the taxpayer. Sec. 1.6664-4(b)(1), Income Tax Regs.
We do not find petitioner liable for a penalty on the
underpayment attributable to the business expenses. Petitioner
prevailed on the tuition expenses he substantiated. As for the
remaining expenses, petitioner established at trial that he
incurred substantial business expenses for which he was not
reimbursed. Were it not for a loss of records in moves
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011