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the circumstances. Neely v. Commissioner, 85 T.C. 934, 947
(1985). Negligence also includes the failure by the taxpayer to
keep adequate books and records. Sec. 1.6662-3(b)(1), Income Tax
Regs. No accuracy-related penalty may be imposed on any portion
of an underpayment if it is shown that there was a “reasonable
cause” for such portion and that the taxpayer acted in “good
faith” with respect to such portion. Sec. 6664(c)(1). The
determination of whether a taxpayer acted in good faith is made
on a case-by-case basis, taking into account all pertinent facts
and circumstances. Sec. 1.6664-4(b), Income Tax Regs. The most
important factor is the extent of the taxpayer’s efforts to
determine the proper tax liability. Id.
As previously stated, respondent bears the burden of
production with respect to all penalties. See sec. 7491(c). The
burden imposed by section 7491(c) is only to come forward with
evidence regarding the appropriateness of applying a particular
addition to tax or penalty to the taxpayer. Respondent need not
negate all defenses to the additions or penalties. See Higbee v.
Commissioner, supra at 446. Respondent has met his burden with
respect to his claim of negligence by establishing that
petitioner understated his tip income and that petitioner did not
keep a tip diary. Further, petitioner has not shown that there
was reasonable cause for his failure to claim his additional tip
income for taxable year 2000. Therefore, we sustain respondent’s
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