Reginald James Smith - Page 8

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          disregard.  Id.  The Commissioner bears the burden of production            
          with respect to the accuracy-related penalty.  See sec. 7491(c);            
          Higbee v. Commissioner, 116 T.C. 438, 446 (2001).                           
               An exception to the section 6662 penalty applies when the              
          taxpayer demonstrates:  (1) There was reasonable cause for the              
          underpayment, and (2) the taxpayer acted in good faith with                 
          respect to the underpayment.  Sec. 6664(c).  Whether the taxpayer           
          acted with reasonable cause and in good faith is determined by              
          the relevant facts and circumstances on a case-by-case basis.               
          See Stubblefield v. Commissioner, T.C. Memo. 1996-537; sec.                 
          1.6664-4(b)(1), Income Tax Regs.  “Circumstances that may                   
          indicate reasonable cause and good faith include an honest                  
          misunderstanding of fact or law that is reasonable in light of              
          all the facts and circumstances, including the experience,                  
          knowledge, and education of the taxpayer.”  Sec. 1.6664-4(b)(1),            
          Income Tax Regs.  The most important factor is the extent of the            
          taxpayer’s effort to assess the proper tax liability.                       
          Stubblefield v. Commissioner, supra; sec. 1.6664-4(b)(1), Income            
          Tax Regs.                                                                   
               As discussed above, petitioner worked for Onyx as a                    
          warehouse employee, stocking and keeping inventory.  After he was           
          terminated in 2002, petitioner had difficulty finding a new job.            
          Petitioner was evicted from his home and lived in his car for               
          several months because he could not pay the rent and had no other           

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