Steve Gerald Huisenfeldt - Page 13

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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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