T .C. Su m m ary Op i n io n 2 01 9 -1 3

UNITED STATES TAX COURT

J ENNIFER ESTEEN, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 5 3 6 7-1 8S. Fi l edJ u l y 2 , 2 0 1 9.

J en n i fer Es t een , p ro s e. El i zab et h F. Ro d o n i , fo r res po n d en t .

SUM M ARY OPINION PANUTHOS, Sp eci al Tri al J u d g e: Th i s cas e was h eardp urs u an t t o th e p ro v is i o n s o f s ect i o n 7 4 6 3 o f t h e In t ern al Rev en u e Co d e i n effect wh en th e p et i t i o n was fi l ed
. 1 Pu rs u an t t o s ect i o n 7 4 6 3(b ), th e d eci si on t o b e en t eredi s n o t

1 Un l es s o th erwi s e i nd i cat ed , s ect io n referen ces are t o t h e In t ern al Rev en u e (co n ti n u ed ...)- 2
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rev i ewab l e b y

an y o ther co u rt , an d t h i s o p i n i o n s h al l n o tb e t reat ed as p reced en t fo r an y o th er cas e. In a n o t ice o f d efi ci en cy d at edDecem b er 2 6 , 2 0 17 , res p on d en td et erm i n eda d efi ci en cy

i n p et i t i o ner’ s Fed eral i n co m e t ax o f $ 6 ,1 86 an d a s ect i o n 6 6 6 2 (a) p en al ty o f $ 1 ,2 3 7 fo r the t ax ab l e y ear 2 0 1 5
. Aft er s ub m i s si o n o f t h is cas e t h e Co u rtco n t act ed th e p art i es t o co n s i d er
m at t ers th ath adn o t b een fu l l y d ev el o p ed . Th ereaft er, a jo i nts t i p u l at i o n o f s et t l ed i s su es was fi l edwi th th e Co urto n M ay 1 6 , 2 0 1 9 . Aft er co n ces s io n s, 2 th e i s s u es

1 (...co n t in u ed ) Co d e i n effect fo r t h e y ear i n i s s u e, an dal l Ru l e referen ces are t o th e Tax Co u rt Ru l es o f Pract i ce an dPro cedu re. Al l am o u nt s are ro u n d edt o t h e n eares td o l l ar am ou n t .

2 Pet i t i on er wi th drew $ 2,4 1 3 fro m h er Ro th i n d i v i du al ret i rem en tacco u n t (IRA) acco u n ti n 2 0 1 5 . Th e p art i es h av e s t ip u l at edth at p et i t io n er was en t i t l edt o ex cl u d e $ 1 ,8 50 fro m

g ro s s i n co m e o n th aty ear’ s t ax return . Pet i t io n er d i dn o t al l eg e, i n h er p et i t i on o r attri al , th ats h e was en t i t ledt o ex cl u de t he rem ai n i n g $ 5 6 3 d i s tri b u t io n fro m g ro s s i n co m e. Th ati s s u e i s therefo re d eem edco n ced ed
. See Ru l e 3 4 (b )(4 ) (“ A n y

i s s u e n o t rai s ed i n th e as s i g n m en t s o f erro r s h al l b e d eem edt o b e co n ced ed .”); cf. Ll o y dv . Co m m i s s io n er, T.C. M em o . 2 0 1 7 -6 0 , at* 7 n .3 (d eem i n g s i m i l arl y

co n ced edan y

s ec. 6 7 5 1 (b )(1 ) ch al l en g e t o as s es s ab l e p en al t i es i n a s ec. 6 3 30 l ev y cas e). In th e n o t i ce o f d efi ci en cy res p on d en t d et erm i n eda 1 0 % ad d it i o n al t ax p u rs u an t t o s ec. 7 2(t ) rel at edt o the Ro th IRA. Ho wev er, p et i ti o n er u sed th e d i s t ri b u t ed fu n d s t o p u rch as e a h o m e i n 2 0 1 5 . Th e p art i es h av e s ti p ul at ed th at p et i t i o n er q u al i fi edfo r t he fi rs tt i m e h o m e p u rch as e ex cep t i o n u n d er s ec. 7 2(t )(2 )(F) fo r t ax y ear 2 0 1 5 . Thu s , res p o n d en t h as co n ced ed th e i s s ue, an d p et i t i o n er i s n o ts ub ject t o t h e ad d i t io n al t ax fo r p rem ature d i s tri b u t i o n fro m

a ret irem en t p l an . See s ec. 7 2 (t )(2 )(F).- 3
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fo r d eci s i o n are wh eth er p et i ti o n er i s (1 ) en t i t l edt o cert ai n car an dtru ckex p en s e d educt i o n s cl ai m edo n Sch edu l e C, Pro fi to r Lo s s Fro m Bu s i n es s , (2 ) en t i t l edt o a cl ai m edSch edu l e C ex p en s e d edu ct i o n fo r “ edu cat i o n ” (edu cat i on ex p en s e d educt i o n ), (3 ) en t i t l edt o a d edu ct i o n fo r u s e o f a p o rt i o n o f h er h o m e as an
o ffi ce, an d (4 ) l i ab l e fo r a p en al ty p u rs u an tt o s ect i o n 6 6 6 2(a) fo r a s ub s tan t i al
u n d ers t at em en to f i n co m e t ax an d/ o r n eg l ig en ce. Back gro u n d So m e o f t h e fact s h av e b een s ti p u lat ed an dare s o fo u n d. Pet it i o n er res i d ed i n Cal i fo rn i a atth e t i m e t h e p et i t i o n was fi l ed . Th e fact s i n th i s reco rdare
s o m ewh ati n co m

p l et e b ecau se o f t h e l i m i tedd o cu m en t s an d n arrat i v e p ro vi d edb y th e p art i es . Du ri n g 2 0 0 7 p et i t i o n er p erfo rm eds erv i ces as a p s y ch i at ri c m en t al h eal th
n u rs e an d recei v eds al ari es fro m the Ci ty an dCo u n ty

o f San Fran ci sco an d t h e Kai s er Perm an en te M ed i cal Gro up . Inad di t i o n t o h er wo rkas a s al ari ed
em pl o y ee, p et i t i o n er recei v ed $1 2 ,0 0 0 i n g ro s s recei p t s fro m h er s ol e p ro p ri et ors h i p n u rs i n g act i v i ty . Pet i t i on er ap p aren tl y trav el edt o v ari o u s faci l i t i es t o p ro v i d e s erv i ces t o p at i en ts as a p ri v at e nu rs e. W i th res p ectt o h er n o n em p l o y ee
n u rs i n g act i v i ty , p et i t i o n er m ai n t ai n eda o n e-p ag e cal en dar wh ere s h e m ad e n o t es
o f l o cat i o n s t o wh i ch s he t rav el ed . Ats om e p o i n taft er t he y ear i n i s s u e p et i t i o n er- 4
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co m p l et eda m o re d et ai l eds ch edu l e wh i ch i n cl u d edth e d at es , l o cat i o ns , an d
m i l eag e. Pet i t i o ner p u rch as ed a h om e i n 2 0 1 5 . See s up ra n o te 2
. Pet i t i o n er as s ert s th ats h e u s ed s om e p arto f t h e h o u s e as a h o m e o ffi ce. Th e reco rdi n cl ud es n o d et ai ls o f t h e wo rkp erfo rm edb y p et i t i o n er i n th e h om e o ffi ce. Onh er 2 0 1 5 ret u rn p et i t i o n er co m p let eda Sch edu l e C, wh i ch refl ect ed $ 1 2 ,0 0 0 i n g ro ss recei pt s an d$ 3 6 ,4 7 0 i n rep ort ed ex p en s es . Ina n ot ice o f d efi ci en cy

res p o n d en t d i s al l o wed(1 ) cl ai m edSch edu l e C car an dtru ckex p en s e d educt i o n s o f $ 1 5 ,8 1 3 an d(2 ) a cl ai m edSch edu l e C edu cat i o n ex p en s e d edu ct i on
o f $ 3 , 2 2 1 . Th e n o t i ce o f d efi ci en cy al s o d et erm i n eda p en al ty p u rs u an tt o s ect i o n 6 6 6 2 (a). Atth e t im e o f t he fi l i n g o f t h e p et i t i o n an am en d ed 2 01 5 t ax retu rn was
s ub m i t t edt o th e Co u rt . Th e am en dedretu rn , wh i ch was n o tp ro ces sedb y th e In t ern al Rev enu e Serv i ce (IRS), was at tach edas an ex h ib i tt o th e s t i p ul at i o n o f fact s. Th e am en d edretu rn i n cl u d eda Sch edu le C wh i ch rep o rt edzero i n g ro s s recei p t s an d $ 4 0 ,9 2 6 i n ex p en s es . Th e i n creas e i n rep o rt ed Sch edu le C ex p en s es i s du e t o i n cl u di n g a d edu ct i o n fo r d ep reci at i o n an di n s u ran ce an d o th er m in o r ch an ges t o am o u n t s rep o rt edo n th e o ri g i n al Sch edu l e C. Th e am en dedretu rn al s o rep o rt edas i n co m e $ 2 , 4 1 3 as an IRA d is tri b u t i o n an dan ad d i t i o n al t ax o f $ 2 4 1- 5
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wh i ch was n o t rep o rt edo n th e o ri g i n al retu rn . Pet i t i o n er cl ai m edan edu cat i o n
ex p en s e d educt i o n o f $ 3 ,2 2 1 o n th e o ri g i n al Sch edu l e C, as wel l as an ap p aren t dup l i cat e edu cat i o n ex p en s e d edu ct i o n o f $ 3 ,1 0 7 o n Sch edu l e A, It em ized Deduct io n s, o n th e o ri g i n al retu rn . Th e am en d edretu rn d i dn otm ak e an y ch an g es t o the Sch edu le C ed u cat i on ex p en s e d edu ct i o n . Th e o ri g i nal an dam en dedreturn s were p rep ared b y p et i ti o n er’ s t ax retu rn p rep arer. Pet i t i on er h adv ery l it t l e kn o wl ed g e o f t h e co n t en ts o f h er ret urn o r
am en d edretu rn . Di s cu ss i o n Bu rd en o f Pro o f In g en eral th e Co m

m is s i o n er’ s d et erm i n at i o n s etfo rt h i n a n o ti ce o f d efi ci en cy

i s p res um edco rrect , an d t h e t ax p ay er b ears th e b u rd en o f p ro v i ng th at th e d et erm i n at i o n i s i n erro r. Ru l e 1 4 2 (a); W el ch v . Hel v eri n g, 2 9 0 U.S. 1 1 1 , 1 15 (1 9 3 3). Pu rs u an tt o s ect i o n 7 4 9 1 (a), t h e b u rd eno f p ro o f as t o fact ual m at t ers
s h i ft s t o th e Co m

m is s i o n er u n d er cert ai n ci rcu m s t an ces . Pet i t io n er h as n o t
as s ert ed o r o th erwi se s h own thats ect i o n 7 4 9 1 (a) ap p li es . See s ec. 7 4 9 1 (a)(2 )(A)
an d (B). Th erefo re, p et i t i o ner b ears th e b urd en o f p ro o f.- 6
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Cl ai m edSch edu l e C Ex p en s e Dedu ct i o n s Sect io n 1 6 2 (a) g en eral l y

al lo ws d educt i o n s fo r al l o rd i n ary an d n eces s ary
ex p en s es p ai d o r i n cu rreddu ri n g the t ax ab l e y ear i n carry in g o n an y trad e o r b u s i n es s . Ing en eral n o d edu ct i o n i s p erm i t t edfo r p ers o n al , l i v in g , o r fam il y
ex p en s es . Sec. 2 6 2 (a). Th e t ax p ay er b ears th e b u rd en o f p ro vi n g thatex p en s es
were o f a b u s i n es s n atu re rat h er t h an p ers o n al an dth at they were o rd in ary

an d
n eces s ary . Ru l e 1 4 2 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. at 1 1 5
. Dedu ct i o n s are a m at t er o f l eg i s l at i v e g race, an dthe t ax p ay er b ears th e b u rd eno f p ro vi ng h e o r s h e i s en t i t l edt o an y d edu ct i o n cl ai m ed
. Thu s , the t ax p ay er i s req ui redt o m ai n tai n reco rd s s uffi ci en t t o s ub st an t i at e ex p en s es
u n d erl y i n g d edu ct i o n s cl ai m edo n h i s o r h er ret u rn . Sec. 6 0 0 1 ; s ec. 1 .6 0 01 -1 (a), In co m e Tax Reg s .; s ee New Co l o n i al Ice Co
. v . Hel v eri n g , 2 9 2 U.S. 4 35 , 4 4 0 (1 9 3 4). If t h e t ax p ay er i s ab le t o es t ab l i s h th ath e o r s he p ai do r i n cu rreda d educt i b l e ex p en s e b u t i s u n ab l e t o s ub s t an t i at e t h e p reci s e am o u n t , th e Co u rt g en eral l y m ay ap p ro x i m at e t h e d edu ct i b l e am o u n t , b u to n l y i f t h e t ax p ay er p res en t s s u ffi ci en tev i d en ce t o es t ab l i s h a rat i o n al b as i s fo r m ak i n g the es t i m at e. See Co h an v . Co m

m i s s i o n er, 3 9 F.2 d5 4 0 , 5 4 3 -5 44 (2 d Ci r. 1 93 0 ); s ee al s o Van icekv . Co m

m i s s i o n er, 8 5 T.C. 7 3 1 , 7 4 2-7 4 3 (1 9 8 5 ).- 7
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Bu s i n es s ex p en s es s p eci fi edi n s ect i on 2 7 4 are s ub jectt o ru l es o f
s ub s t an t i at i o n th ats up ers ed e t h e Co h an ru l e. See s ec. 2 7 4 (d ); San fo rdv . Co m m i s s i o n er, 5 0 T.C. 8 23 , 8 2 7 -8 2 8 (1 9 6 8 ), aff’ dp er cu ri am , 4 1 2 F.2 d2 0 1 (2 d Ci r. 1 9 69 ); s ec. 1 .2 7 4-5 T(a), Tem p o raryIn co m e Tax Reg s ., 5 0 Fed
. Reg . 4 6 0 1 4 (No v. 6 , 1 9 8 5 ). Sect i o n 2 7 4(d ) ap p l i es t o cert ai n b u s i n es s ex p en s es i n cl u di n g , am on g o th er t h i n gs , ex p en s es fo r g i ft s , l i s t edp ro p erty , 3 an d t rav el (i n cl u d i n g
m eal s an dl o d g i n g wh i l e awayfro m h om e). To s ub s tan t i at e a d edu ct i o n at tri b u t ab l e t o trav el ex p en s es , a t ax p ay er m u s tm ai n t ai n ad equ at e reco rd s o r p res en tco rro b orat i v e ev i d en ce o f t h e t ax p ay er’ s o wn s t at em en tt o s h ow t h e fo l l o w i n g fo r each ex p en s e: (1 ) t h e am o u n t , (2 ) t h e t i m e, (3 ) t h e p l ace, an d(4 ) t h e b u s i n es s p u rp o s e. Sec. 1 .2 7 4 -5 T(b )(2 ), Tem p oraryIn co m e Tax Reg s ., 5 0 Fed
. Reg
. 4 6 0 1 4 -4 60 15 (No v . 6 , 1 9 8 5 ). To s ub s t an t i at e ex p en s es rel at in g t o p as s en g er
au t o m ob i l es , a t ax p ay er m u s t s ub s t an t i at e wi th ad equ at e reco rd s o r s u ffi ci en t
ev i d en ce co rro b o rat i n g h i s o r h er o wns tat em en t : (1 ) t h e am o u n to f each s ep arat e
ex p en s e, (2 ) t h e m il eag e fo r each b u s i n es s u s e o f t h e p as s en ger au to m o b i l e an dth e t o t al m i l eag e fo r al l p u rp o s es du ri n g th e t ax ab l e p eri o d , (3 ) t h e d at e o f t h e b u s i n es s u s e, an d (4 ) t h e b u s in es s p u rp o s e o f t h e u s e. See i d . s ub p ara. (6 ), 5 0 Fed
. Reg
. 4 6 0 1 6
.

3 Li s t edp ro p ert y

i n cl u d es an y

“p as s en g er au t o m ob i l e”. Sec. 2 8 0 F(d )(4 ).- 8
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W i th res p ect t o th e d is al l o wedcar an d t ru ckex p en s e d educt i on , p et i t i o n er h as fai l edt o s at i s fy

h er b urd eno f p ro o f. Pet i t i o n er’ s t es t im o n y was v ag u e an d l ack edan y

s p eci fi ci ty . Her m eag er reco rd s , i n cl ud i n g a o n e-p ag e cal en dar, were l i kewi s e n o th el p fu l . Pet i t i on er h as fai l edt o ad equ at el y s ub st an t i at e th e rep o rt ed
ex p en s es as req u iredb y

s ect i o n 2 7 4 (d ). Acco rd in g l y , we s u s t ai n res p o n den t ’ s d i s al lo wan ce o f t h e cl ai m edSch edu l e C car an dtru ckex p en s e d edu ct i on . Pet i t i o ner fai l edt o p ro v id e an y ex p l an at i o n as t o th e cl ai m edSch edu l e C edu cat i o n ex p en s e d educt i o n . Wh en i twas p o i n t edo u tt o p et it io n er t h ats h e al s o cl ai m edan edu cat i o n ex p en s e d educt i o n i n ex ces s o f $ 3 , 0 0 0 o n h er Sch edu l e A,
s h e co ul dn o tex p l ai n wh atap p ears t o b e a dup l i cat i o n . Acco rd i ng l y , we s us t ai n
res p o n d en t’ s d i s al l o wan ce o f the cl ai m edSch edu l e C edu cat i on ex p en s e d educt i o n . Ho m e Offi ce Cl ai m

an dth e Am en d edRetu rn Pet i t i o ner was u n ab l e t o ex p l ai n m an y o f t h e d i fferen ces b et ween the
am ou n t s s h o wno n t h e o ri g i n al retu rn an dth o s e o n th e am en d edretu rn . Fo r
ex am p l e, s h e ackn o wl ed g edth ats h e recei v eds el f-em p l o y m en ti n co m e an dth at th e $ 1 2,0 0 0 rep o rt edo n t h e o ri g i n al retu rn was accu rat e. Sh e co u l dn o tex p l ai n wh y h er am en d edreturn rep o rt edn o g ro s s recei p t s . Pet i t i o n er fai l edt o p ro v i d e
an y ex p lan at i o n o th er t h an th ats h e rel i edo n h er t ax retu rn p rep arer.- 9
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As a g en eral ru l e, s ect io n 2 8 0 A(a) d en i es a d edu ct io n wi th res p ectt o a dwel l i n g u n itth atth e t ax pay er u s es as a res i d en ce. Sect i o n 2 8 0 A(c)(1 )(A) p erm i t s th e d edu ct i o n o f ex p en s es al l o cab l e t o a p o rt i o n o f a d wel l in g u n i tth atth e t ax p ay er u s es ex cl u s i v el y an d reg u l arl y

as th e p ri n ci p al p l ace o f b u s i n es s fo r t h e t ax p ay er’ s trad e o r b u s i n es s . As p et i ti o n er rep o rt edth i s am o un t o n h er Sch edu l e C, we p res u m e t h at s he b el i ev es th i s ex p en d i tu re rel at es t o h er s o l e p ro pri et o rs h i p act i vi ty rat h er t h an h er act i v i ty

as an em p l o y ee. Pet i t i o n er p res en teds o m e g en eral t es t i m o ny th ats h e p u rch as eda h o m e an dex p en d edfu n ds fo r i m p ro v em en t s . Sh e fu rt her p ro v id eda d o cu m en twh i ch d et ai ls ex p en di tu res m ad e fo r h er h o m e. Th e d o cu m en trefl ect s th at$ 2 4 ,4 2 9 was ex pen d edfo r h o m e i m p ro v em en t s , o f wh i ch $ 6 ,1 7 0 rel at es t o a h o m e o ffi ce. Wh i l e p et i t i o n er p res en t eds o m e l i m i t eds ubs t an ti at i o n o f ex p en di tu res rel at i n g t o h er h o m e i m

p ro v em en tact i v i ti es , n o i nfo rm at i o n was p ro v i d edt o th e Co u rtd es cri bi n g th e n atu re o f an y b u s i n es s act i v i ty

thatt o o k p l ace i n p et i t i o n er’ s h o m e o r t h e p h y s ical s p ace i n wh i ch an y s u ch act i v it y

m i g hth av e t ak enp l ace. Pet i t io n er s i m

p l y fai ledt o p res en ts u ffi ci en tev id en ce t o es t ab l i s h en t i t l em en tt o a h o m e o ffi ce d edu ct i o n .- 1 0 -

Accu racy -Rel at edPen al ty --Sect i o n 6 6 6 2 Sect io n 6 6 6 2 (a) an d(b )(2 ) i m p o s es an accu racy -rel at edp en al ty o n an y p o rt i on o f an u n d erp aym en to f Fed eral i n co m e t ax th at i s at tri bu t ab le t o t h e t ax p ay er’ s “ s ubs t an t i al u n d ers tat em en to f i n co m e t ax .” Anu n d ers t at em en to f Fed eral i nco m e t ax i s s ubs t an t i al i f t h e am o u nto f t h e u n ders t at em en tfo r th e t ax ab l e y ear ex ceed s the g reat er o f 1 0 % o f t h e t ax req u ired t o b e s h o wn o n th e retu rn o r $ 5,0 0 0 . Sec. 6 6 6 2(d )(1 )(A). Th e Co m m is s i o n er b ears th e b u rd en o f p ro du ct i o n wi th res p ectt o a s ect i o n 6 6 6 2 p en al ty . Sec. 7 49 1 (c). 4 Ino rd er t o m eet th i s b u rd en the Co m m i s s i o n er n eed
o n l y m ak e a p ri m a faci e cas e t hati m p o s it i on o f t h e p en al ty

i s ap p ro p ri at e. Hi g b ee

4 Th e Co m

m i ss i o n er’ s b u rd en o f p ro du ct i o n fo r p en al t ies i m p o s edu n d er s ec. 6 6 6 2 (a) i n cl u d es th e b u rd en o f p ro du ci n g ev i d en ce es t ab l is hi n g thatth e p en al t i es were “ p ers on al l y

ap p ro v ed(i n wri t i n g ) b y th e i m m ed i at e s up erv i s or o f t h e i n d i v i du al m ak i n g s u ch d et erm i n at i on ” as req ui redb y s ec. 6 7 5 1 (b )(1 ), u n l es s a s t atu to ry ex cep t i o n ap p l i es . See Ch ai v . Co m m i s s io n er, 8 5 1 F.3 d1 9 0 , 2 1 7 , 2 2 1
- 2 2 2 (2 d Ci r. 2 01 7 ), aff’ g i n p art , rev ’ g i n p artT.C. M em o. 2 0 1 5 -4 2 ; Graev v . Co m m i s s i o n er, 1 4 9 T.C. 4 8 5 (2 0 1 7), s up p l em en t i n g an do verru l i ng i n p art , 1 4 7 T.C. 4 6 0 (2 0 1 6 ). Res p o n den tas s ert s th atth e p en al ty i s s ub jectt o th e ex cep t i o n fo r cal cu lat i on th ro u g h el ect ro ni c m ean s, s ee s ec. 6 7 5 1 (b )(2 )(B), b ecau s e p et i t i o n er’ s retu rn was ex am i n edb y res p o n d en t ’ s Co rres p o n d en ce Ex am i nat i o n Au t om at i o n Sup p o rtp ro g ram an dn o res p o ns e was recei v edfro m p et i t io n er b efo re th e i s s uan ce o f t h e n o t i ce o f d efi ci en cy . W e n o te t h ati n W al qu i s tv . Co m m i s s i o n er, 1 5 2 T.C. _

_ , _

_ (s l i p o p . at1 5 ) (Feb . 2 5, 2 0 1 9 ), th e Co u rth el dthat wh ere “ th e p en al ty

was d et erm i n edm athem at i cal l y b y a co m p u t er s o ft ware p ro g ram wi th o u tth e i n v o l v em en to f a h u m an IRS ex am i ner, * * * th e p en al ty was ‘ au t om at i cal l y

cal cu lat edth ro u g h el ect ro n i c m ean s ,’ s ec. 6 7 5 1 (b )(2 )(B), as th e p l ai n t ex to f t h e s t atu t ory ex cep t i o n req u i res .” Th e ex cep t i on ap p l i es i n th i s cas e.- 1 1 -

v . Co m m i s s i o n er, 1 1 6 T.C. 4 38 , 4 4 6 (2 0 0 1). If t h e u nd ers t at em en t o f i n co m e t ax fo r t h e y ear i n i s s ue i s s ub s t an t i al , th e Co m m i s s io ner h as s at i s fi edth e b u rd en o f p ro duci n g ev i d en ce th atth e p en al ty i s ju s ti fi ed . Res p o n den tm etth i s b u rd en b ecau s e th e am ou nto f p et i t i o n er’ s u n d ers t at em en t fo r 2 01 5 i s s ub s t an t i al
. On ce t h e Co m

m i s s io n er h as m eth i s b u rd en , th e t ax p ay er m ay av o i da
s ect i on 6 6 6 2 (a) accu racy -rel at edp en al ty t o th e ex t en th e o r s h e can d em on s trat e (1 ) reas o nab le cau s e fo r t h e u n d erp aym en tan d(2 ) t h ats h e act ed i n g o o dfai th wi t h
res p ectt o t h e am o u ntp ai d . Sec. 6 6 6 4(c)(1 ). A d et erm in at i o n o f reas o n ab l e cau s e
an d g o o dfai th “ i s m ad e o n a cas e-b y -cas e b as i s , t ak i n g i nt o acco u n tal l p ert i n en t fact s an dci rcu m s t an ces ”, i ncl u d i n g : (1 ) t h e t ax p ay er’ s effo rt s t o as s es s th e p ro p er t ax l i ab i l i ty , (2 ) t h e kn o wl ed g e an d t h e ex p eri en ce o f t h e t ax p ay er, an d(3 ) an y rel i an ce o n th e ad v i ce o f a p ro fes s i o n al s u ch as an acco u n t an t . Sec. 1 .6 66 4
- 4 (b )(1 ), In co m e Tax Reg s . Ci rcu m s t an ces thati n d i cat e reas o n ab l e cau s e an dg o o d fai th in cl u d e an h o n es tm i s u n d ers tan d i ng o f l aw t h ati s reas on ab l e i n the l i g h to f al l th e s urro u n d in g fact s . Id . Gen eral l y , th e m o s ti m p ort an tfact o r i s th e ex t en t o f th e t ax p ay er’ s effo rtt o as s es s h i s o r h er p ro p er t ax l i ab i l i ty . Id . St atu t o ry
co m p l ex i ty al on e d o es n o tco n s t i tu t e reas o n ab l e cau s e. Barn es v . Co m m i ss i o n er, T.C. M em o . 2 01 2 -8 0 , 2 0 1 2 W L 9 5 2 7 6 0 , at* 1 5, aff’ d , 7 1 2 F.3 d5 8 1 (D.C. Ci r. 2 0 1 3 ).- 1 2 -

Pet i t i o ner o ffered l i t t l e arg u m en t o r ev i den ce t o m eeth er b u rd eno f p ro o f th atth ere was reas o n ab l e cau s e fo r t h e u n d erp aym en t . Pet i ti o n er as s ert edth ats h e rel i edup o n h er t ax retu rn p rep arer fo r the o ri g i n al t ax retu rn an dth e am en d ed retu rn s ub m i t t edt o th e Co u rt . As d i s cu s sedh erei n th e o ri g in al an dam en d ed retu rn s are n o tco ns i st en twi th p et i t i o n er’ s t es ti m o n y . Th e v ary in g p os i t i o ns d o
n o tas s i s tth e Co u rti n at t em pt in g t o d i s cern th e fact s an dth e co rrect t ax l i ab i l i t y . Pet i t i o ner d i dn o td em o n s trat e t h ats h e m ad e a s u ffi ci en teffo rtt o as s es s th e p ro p er t ax l i ab i l i ty . Th erefo re, wh i l e p et i t i o n er m ay v ery wel l h av e act edi n g o o d fai th , we co n cl u de t h ats h e d idn o tp ro ve t h ats h e act edwi th reas o n ab l e cau s e as t o
an y o f t h e i s s u es fo r wh i ch we h av e s u s t ai n edres p o nd en t ’ s d et erm in at io n . Acco rd in g ly , we s u s t ai n th e accu racy -rel at edp en al ty . W e h av e co n s id eredal l o f t h e p art i es ’ arg u m en t s , an d , t o th e ex t en tn o t ad dres s edh erei n , we co ncl u d e t h atth ey are m o o t, i rrel ev an t , o r wi tho u tm eri t . To g i v e effect t o o u r d is p os i t io n o f t he d is p ut edi s su es , as wel l as th e p art i es ’
co n ces si o n s , s ee s up ra n o t e 2 , Deci s i o n wi ll b e en t eredu n d er Ru l e 1 5 5
.