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also determined that accuracy-related penalties applied because
of the substantial understatements of income tax.
Petitioners timely filed a petition with this Court.
OPINION
Petitioners have conceded that they substantially
understated their income tax under section 6662(a) and (b)(2) for
each of the years at issue. The sole issue remaining is whether
petitioners had reasonable cause for, and acted in good faith
with respect to, the understatements. Petitioners argue that
they reasonably relied on Mr. Borrelli, and therefore the
accuracy-related penalties under section 6662 do not apply.
The taxpayer bears the burden of proving there was
reasonable cause for an understatement of income tax and that he
or she acted in good faith with respect to the understatement.
Higbee v. Commissioner, 116 T.C. 438, 446 (2001); sec. 1.6664-
4(a), Income Tax Regs. The determination of whether the taxpayer
acted with reasonable cause and in good faith depends on the
pertinent facts and circumstances, including the taxpayer’s
efforts to assess his or her proper tax liability, the knowledge
and experience of the taxpayer, and the reliance on the advice of
the professional. Sec. 1.6664-4(b)(1), Income Tax Regs.
Reasonable cause has been found when a taxpayer selects a
competent tax adviser, supplies the adviser with all relevant
information, and consistent with ordinary business care and
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