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relevant facts. See sec. 1.6662-4(d)(3)(ii), Income Tax Regs.
There may be substantial authority for more than one position
with respect to the same item. See sec. 1.6662-4(d)(3)(i),
Income Tax Regs.
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 effort 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 sec-
tion 6662. To meet that burden, respondent must come forward
with sufficient evidence showing that it is appropriate to impose
the accuracy-related penalty. Higbee v. Commissioner, 116 T.C.
438, 446 (2001). Although respondent bears the burden of produc-
tion with respect to the accuracy-related penalty that respondent
determined for each of petitioners’ taxable years 1999 and 2000,
respondent “need not introduce evidence regarding reasonable
cause, substantial authority, or similar provisions. * * * the
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Last modified: November 10, 2007