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imposition of the accuracy-related penalty if the taxpayer
establishes that there was reasonable cause for the
understatement 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.; see United States v. Boyle, 469 U.S. 241, 242
(1985). Although not defined in the Code, “reasonable cause” is
viewed in the applicable regulations as the “exercise of ordinary
business care and prudence”. Sec. 301.6651-1(c)(1), Proced. &
Admin. Regs.; see United States v. Boyle, supra at 246. The
determination of whether a taxpayer acted with reasonable cause
and in good faith is made on a case-by-case basis, taking into
account all the pertinent facts and circumstances. Sec. 1.6664-
4(b)(1), Income Tax Regs. Generally, the most important factor
is the extent of the taxpayer’s effort to assess the proper tax
liability, including reliance on the advice of a tax return
preparer. Id.
By virtue of section 7491(c), respondent has the burden of
production with respect to the accuracy-related penalty. To meet
this burden, respondent must produce sufficient evidence
indicating that it is appropriate to impose the penalty. See
Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once
respondent meets this burden of production, petitioner must come
forward with persuasive evidence that respondent’s determination
is incorrect. Rule 142(a); see Higbee v. Commissioner, supra.
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