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that portion and the taxpayer acted in good faith with respect to
that portion. 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 pertinent facts and circumstances.
Sec. 1.6664-4(b)(1), Income Tax Regs.
In this case, the claimed charitable contribution deduction
in 1998 was aggressive and bears scrutiny, but we believe
petitioner claimed the deduction in good faith based upon his
knowledge of the facts and understanding of the law. This is not
a valuation case where, under section 6664(c)(2), the reasonable
cause exception would not be available unless the taxpayer relied
on a qualified appraisal and made a good faith investigation of
the property’s value. The value of the property has always been
known, $1,280,000. Petitioner merely misunderstood his interest
in the property according to the purchase agreement with Jellico.
We find this misunderstanding to have been in good faith.
With respect to all other 1998 and 1999 items, we find
petitioner’s claims to be reasonable given his difficult
circumstances at the time the tax returns were filed.
Petitioner, once the president and CEO of a health care
organization, had lost his job, his house, and his interest in a
deferred compensation account, and was recently divorced. Thus,
given these difficult circumstances and petitioner’s limited
knowledge of the tax laws, we find that the claimed deductions
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