G. Kierstead Family Holdings Trust, et al. - Page 4

               Petitioners timely filed Federal individual as well as trust           
          income tax returns for the years at issue.  On September 28,                
          2005, separate notices of deficiency were sent to each party.  In           
          the notice of deficiency sent to petitioners Glenn and Carol                
          Kierstead, respondent determined that the trusts must be                    
          disregarded for Federal income tax purposes.  Petitioners Glenn             
          and Carol Kierstead, as well as the two trusts, timely filed                
          petitions with the Court on December 22, 2005.                              
               Section 6662(a) imposes a 20-percent penalty on the portion            
          of an underpayment attributable to a substantial understatement             
          of income tax.  While the Commissioner bears the initial burden             
          of production and must come forward with sufficient evidence                
          showing it is appropriate to impose an accuracy-related penalty,            
          the taxpayer bears the burden of proof as to any exception to the           
          penalty.  See sec. 7491(c); Rule 142(a); Higbee v. Commissioner,            
          116 T.C. 438, 446-447 (2001).  In order to meet the burden of               
          proof, a taxpayer must present evidence sufficient to persuade              
          the Court that the Commissioner’s determination is incorrect.               
          Higbee v. Commissioner, supra at 447.  Petitioners concede that             
          respondent has met his burden of production.  However, they argue           
          that they are not liable for a portion of the section 6662(a)               
          penalties because they, in good faith, relied on the advice of              
          two competent tax professionals.                                            

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