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2(c), Income Tax Regs. The penalties cannot be stacked, even
when the taxpayer’s understatement of income is attributable to
more than one of the types of misconduct listed in section
6662(b). Id. Because petitioner’s underpayments of tax were the
result of either gross valuation misstatements or negligence, we
need not consider whether those underpayments were also the
result of substantial understatements of income tax.
F. Alleged Defenses to the Accuracy-Related Penalties
1. Section 6664(c)(1): Reasonable Cause
No penalty is imposed under section 6662 if the taxpayer had
reasonable cause for the underpayment of tax and acted in good
faith. Sec. 6664(c)(1). “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. The
extent of the taxpayer’s efforts to ascertain his proper tax
liability is generally the most important factor. Id.
a. Reliance on the Hoyt Organization
Good faith reliance on professional advice concerning tax
laws may be a defense to negligence penalties. United States v.
Boyle, 469 U.S. 241, 250-251 (1985); see also sec. 1.6664-
4(b)(1), Income Tax Regs. However, “Reliance on professional
advice, standing alone, is not an absolute defense to negligence,
but rather a factor to be considered.” Freytag v. Commissioner,
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