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deductibility of certain items, provides the adviser with all of
the relevant facts, and then follows the adviser’s advice that
the items are fully deductible. Such a taxpayer may be
considered to have demonstrated good faith by seeking
professional advice and to have shown reasonable cause for any
underpayment attributable to that deduction. Sec. 1.6664-
4(b)(2), Example (1), Income Tax Regs. However, a finding of
reasonable cause and good faith requires that the adviser
considered all pertinent facts and circumstances, was
knowledgeable in the relevant aspects of Federal tax law, and
made no unreasonable assumptions. Sec. 1.6664-4(c), Income Tax
Regs.
On the evidence and argument presented by her counsel,
petitioner’s assertion that her trade or business had not changed
relies mostly on her employment in the same industry before and
after the M.B.A., not on a detailed analysis of her positions.
Furthermore, as discussed, only her M.B.A. met the specialty
education requirements of Refreshment Brands; namely, a degree in
business administration. Respondent has met his burden of
production under section 7491(c) to show that imposing the
section 6662 accuracy-related penalty is appropriate.
Petitioner had received and accepted the job offer from
Refreshment Brands before she filed her 2002 Federal income tax
return. On that return, she listed her occupation in the United
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Last modified: March 27, 2008