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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Last modified: November 10, 2007