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Commissioner, 116 T.C. 438, 446 (2001). Once the Commissioner
has done so, the burden of proof is upon the taxpayer to
establish reasonable cause and good faith. Higbee v.
Commissioner, supra at 449.
2. Section 6662(a) Penalty
Pursuant to section 6662(a), a taxpayer may be liable for a
penalty of 20 percent of the portion of an underpayment of tax
(1) attributable to a substantial understatement of tax or (2)
due to negligence or disregard of rules or regulations. Sec.
6662(b). The term “understatement” means the excess of the
amount of tax required to be shown on a return over the amount of
tax imposed which is shown on the return, reduced by any rebate
(within the meaning of section 6211(b)(2)). Sec. 6662(d)(2)(A).
Generally, an understatement is a “substantial understatement”
when the understatement exceeds the greater of $5,000 or 10
percent of the amount of tax required to be shown on the return.
Sec. 6662(d)(1)(A). The term “negligence” in section 6662(b)(1)
includes any failure to make a reasonable attempt to comply with
the Code. Sec. 6662(c). Negligence has also been defined as the
failure to exercise due care or the failure to do what a
reasonable person would do under the circumstances. See Allen v.
Commissioner, 92 T.C. 1, 12 (1989), affd. 925 F.2d 348, 353 (9th
Cir. 1991); Neely v. Commissioner, 85 T.C. 934, 947 (1985). The
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