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“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c).
Failure to keep adequate records is evidence not only of
negligence, but also of intentional disregard of regulations.
See sec. 1.6662-3(b)(1) and (2), Income Tax Regs.; see also
Magnon v. Commissioner, 73 T.C. 980, 1008 (1980).
The accuracy-related penalty under section 6662(a) does not
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 petitioner’s taxable year 1999, respondent “need not
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Last modified: November 10, 2007