- 24 -
appropriate to impose the penalty. See sec. 7491(c); Higbee v.
Commissioner, 116 T.C. 438, 446-447 (2001). Respondent relies on
the two prior decisions this Court issued holding that petitioner
did not conduct the farming activity for a profit. Mitchell v.
Commissioner, T.C. Memo. 2001-269;6 Mitchell v. Commissioner,
T.C. Summary Opinion 1998-200.7 Respondent argues, and we agree,
that, absent substantial changes in its operation, the farming
activity was not conducted for profit pursuant to section 183.
We find that respondent has met his burden of production
regarding 1998 and 2000.
The accuracy-related penalty does not apply to any portion
of an underpayment, however, if the taxpayer shows that there was
reasonable cause for, and that the taxpayer acted in good faith
with respect to, that portion. Sec. 6664(c)(1); sec. 1.6664-
4(b), Income Tax Regs. Petitioners have the burden of proving
that the accuracy-related penalty does not apply because of this
exception. See Higbee v. Commissioner, supra at 446.
The determination of whether the taxpayer acted with
reasonable cause and in good faith depends upon the pertinent
facts and circumstances. We emphasize the taxpayer’s efforts to
6We note that Mitchell v. Commissioner, T.C. Memo. 2001-269,
was not issued until Oct. 4, 2001, which is after the due date
for filing a return for 2000.
7Summary opinions should not be cited as authority. Sec.
7463. We consider it here for the limited purpose of deciding
whether respondent met his burden of production as to the
accuracy-related penalty for 1998 and 2000.
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