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liability. See sec. 1.6664-4(b)(1), Income Tax Regs. An honest
misunderstanding of fact or law that is reasonable in light of
the experience, knowledge, and education of the taxpayer may
indicate reasonable cause and good faith. Remy v. Commissioner,
T.C. Memo. 1997-72.
Petitioners made an insufficient effort to determine their
proper tax liability for 2000. The instructions for the Form
5329 clearly did not provide for an exception from the section
72(t) additional tax on the distributions to petitioner.
Petitioners merely crafted an additional exception to accommodate
their situation. There is no evidence in the record to show that
they solicited the assistance of a tax professional regarding
their liability for the section 72(t) additional tax on the
qualified plan distributions. The Court sustains respondent on
this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
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Last modified: May 25, 2011