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Sec. 6662(d)(1)(A). The term “negligence” in section 6662(b)(1)
includes any failure to make a reasonable attempt to comply with
the Code. Sec. 6662(c). Negligence has also been defined as the
failure to exercise due care or the failure to do what a
reasonable person would do under the circumstances. See Allen v.
Commissioner, 92 T.C. 1, 12 (1989), affd. 925 F.2d 348, 353 (9th
Cir. 1991); Neely v. Commissioner, 85 T.C. 934, 947 (1985). The
term “disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c). Failure to keep adequate records may
be 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 Benson v. Commissioner, T.C. Memo.
2007-113.
In the matter before us, respondent has met the burden of
production imposed on him by section 7491(c). Respondent has
shown that petitioner failed to keep adequate records for the
years at issue. To avoid application of the penalty, petitioner
must therefore demonstrate that the underpayments of tax for
1999, 2000, and 2001 were due to reasonable cause and good faith.
See sec. 6664(c)(1); Higbee v. Commissioner, supra at 449.
The decision as to whether a taxpayer acted with reasonable
cause and in good faith depends upon all the pertinent facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. Relevant
factors include the taxpayer’s efforts to assess his or her
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