Michael D. and Suzan L. Storer - Page 21

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          attempt to comply with the provision of the Internal Revenue                
          Code, including failure to exercise due care or failure to do               
          what a reasonable person would do in the circumstances.  Sec.               
          6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.  The term                    
          “disregard” includes any careless, reckless, or intentional                 
          disregard of the Code or the temporary or final regulations                 
          issued pursuant to the Code.  Sec. 6662(c); sec. 1.6662-3(b)(2),            
          Income Tax Regs.                                                            
               Section 7491(c) places on the Commissioner the burden of               
          producing evidence showing that it is appropriate to impose any             
          penalty or addition to tax.  Once the Commissioner meets that               
          burden, as in the instant case, the taxpayer must produce                   
          evidence sufficient to show that the Commissioner’s determination           
          is incorrect.  Higbee v. Commissioner, 116 T.C. 438, 447 (2001).            
          Petitoners have not produced evidence sufficient to prove that              
          respondent’s determination in this case was incorrect.                      
               The accuracy-related penalty does not apply to any portion             
          of an underpayment with respect to which it is shown that there             
          was a reasonable cause and that the taxpayer acted in good faith.           
          Sec. 6664(c)(1).  The decision as to whether the taxpayers acted            
          with reasonable cause and in good faith depends upon all                    
          pertinent facts and circumstances.  Sec. 1.6664-4(b)(1), Income             
          Tax Regs.  Generally, the most important factor is the extent of            
          the taxpayers’ efforts to assess the proper tax liability.  Id.             

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