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by $175,365. The understatement exceeds $5,000 as well as 10
percent ($114,823) of the amount required to be shown on the
return. The amount of tax required to be shown on petitioner’s
return for the taxable year 2001 is $85,479. Petitioner reported
a tax liability of $9,252, understating his liability by $76,227.
The understatement exceeds $5,000 as well as 10 percent ($8,548)
of the amount required to be shown on the return. Respondent met
his burden of production under section 7491(c).
However, the accuracy-related penalty is not imposed upon
any portion of the underpayment as to which the taxpayer acted
with reasonable cause and in good faith. Sec. 6664(c)(1).
Reliance on the advice of a tax professional may constitute
reasonable cause and good faith if, under all the facts and
circumstances, the reliance is reasonable and the taxpayer acted
in good faith. Id.; see Neonatology Associates, P.A. v.
Commissioner, 115 T.C. 43, 98 (2000), affd. 299 F.3d 221 (3d Cir.
2002); sec. 1.6664-4(c)(1), Income Tax Regs.
For a taxpayer to reasonably rely on the advice of a
professional, the taxpayer must prove by a preponderance of the
evidence that: (1) The adviser was a competent professional who
had sufficient expertise to justify reliance; (2) the taxpayer
provided necessary and accurate information to the adviser; and
(3) the taxpayer actually relied in good faith on the adviser’s
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