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apply to any portion of an underpayment if it is shown that there
was reasonable cause for, and that the taxpayer acted in good
faith with respect to, such portion. Sec. 6664(c)(1). The
determination of whether the taxpayer acted with reasonable cause
and in good faith depends on the pertinent facts and circum-
stances, including the taxpayer’s efforts to assess such tax-
payer’s proper tax liability, the knowledge and experience of the
taxpayer, and the reliance on the advice of a professional, such
as an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.
Respondent has the burden of production under section
7491(c) with respect to the accuracy-related penalty under
section 6662. To meet that burden, respondent must come forward
with sufficient evidence indicating that it is appropriate to
impose that penalty. Higbee v. Commissioner, 116 T.C. 438, 446
(2001). Although respondent bears the burden of production with
respect to the accuracy-related penalty that respondent deter-
mined for each of petitioners’ taxable years 2001 through 2004,
respondent “need not introduce evidence regarding reasonable
cause * * * or similar provisions. * * * the taxpayer bears the
burden of proof with regard to those issues.” Id.
With respect to the accuracy-related penalty under section
6662(a) that respondent determined for each of petitioners’
taxable years 2001 through 2004, Mr. Agbaniyaka testified that
petitioners maintained documents to support the amounts at issue.
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Last modified: November 10, 2007