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establish the amount of the expense, the time and place of each
use, and the business purpose of the use of the Honda and Nissan.
Respondent is sustained on this issue.
Accuracy-Related Penalty
Respondent determined that petitioner is liable for the
accuracy-related penalties under section 6662(a) for 2001 and
2002. The accuracy-related penalty is equal to 20 percent of any
portion of an underpayment of tax required to be shown on the
return that is attributable to the taxpayer’s negligence or
disregard of rules or regulations. Sec. 6662(a) and (b)(1).
“Negligence” consists of any failure to make a reasonable attempt
to comply with the provisions of the Internal Revenue Code and
also includes any failure to keep adequate books and records or
to substantiate items properly. Sec. 6662(c); sec. 1.6662-
3(b)(1), Income Tax Regs. “Disregard” consists of any careless,
reckless, or intentional disregard. Sec. 6662(c).
An exception applies to the accuracy-related penalty when
the taxpayer demonstrates (1) there was reasonable cause for the
underpayment, and (2) he acted in good faith with respect to such
underpayment. Sec. 6664(c). Whether the taxpayer acted with
reasonable cause and in good faith is determined by the relevant
facts and circumstances. The most important factor is the extent
of the taxpayer’s effort to assess his proper tax liability.
Stubblefield v. Commissioner, T.C. Memo. 1996-537; sec. 1.6664-
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