Douglas A. Gibson - Page 15

                                       - 15 -                                         
          indicating that it is appropriate to impose the penalty.  See               
          Higbee v. Commissioner, 116 T.C. 438, 446 (2001).  Once the                 
          Commissioner meets this burden of production, the taxpayer must             
          come forward with persuasive evidence that the Commissioner’s               
          determination is incorrect.  Rule 142(a); see Higbee v.                     
          Commissioner, supra.  The taxpayer may meet this burden by                  
          proving that he or she acted with reasonable cause and in good              
          faith.  See sec. 6664(c)(1); see also Higbee v. Commissioner,               
          supra; sec. 1.6664-4(b)(1), Income Tax Regs.                                
               C.  Analysis                                                           
               Respondent met his burden of production pursuant to section            
          7491(c).  Petitioner’s 2002 income tax return contains an                   
          understatement of income tax greater than $5,000.  See sec.                 
          6662(d)(1)(A)(ii).  Accordingly, petitioner bears the burden of             
          proving that the accuracy-related penalty should not be imposed             
          with respect to any portion of the underpayment for which he                
          acted with reasonable cause and in good faith.  See sec.                    
          6664(c)(1); Higbee v. Commissioner, supra at 446.  Relevant                 
          factors include the taxpayer’s efforts to assess his proper tax             
          liability, including the taxpayer’s reasonable and good faith               
          reliance on the advice of a professional.  Sec. 1.6664-4(b)(1),             
          Income Tax Regs.                                                            
               Petitioner has no relevant tax education, sophistication, or           
          business experience.  Petitioner engaged an experienced tax                 

Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next 

Last modified: November 10, 2007