                          T.C. Memo. 2000-215



                        UNITED STATES TAX COURT



                REED-MERRILL, INC., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 10494-98.                         Filed July 17, 2000.


     Kandace C. Gerdes, for petitioner.

     Joel A. Lopata, for respondent.



                MEMORANDUM FINDINGS OF FACT AND OPINION



     FOLEY, Judge:     By notice dated March 9, 1998, respondent

determined deficiencies of $23,938 and $92,548, and penalties,

pursuant to section 6662(a), of $4,787.60 and $18,509.60,

relating to petitioner’s 1993 and 1994 Federal income taxes,

respectively.    Unless otherwise indicated, all section references

are to the Internal Revenue Code in effect for the years in
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issue, and all Rule references are to the Tax Court Rules of

Practice and Procedure.

     After concessions, the only remaining issue is whether

petitioner is liable for accuracy-related penalties relating to

1993 and 1994.

                          FINDINGS OF FACT

     Petitioner, Reed-Merrill, Inc., was a Nebraska corporation

at the time the petition was filed.     Petitioner, through a

subsidiary corporation, operated a Ford dealership in Ogallala,

Nebraska.   In 1993 and 1994, petitioner employed individuals and

utilized computer systems to keep records.     Petitioner provided

some (i.e., Ford Motor Company Dealer Financial Statements), but

not all, of its records to an accountant hired to prepare

consolidated corporate income tax returns for the years in issue.

Respondent determined that the petitioner understated its income

and is liable for accuracy-related penalties relating to 1993 and

1994.

                              OPINION

     Section 6662(a) imposes a penalty on an underpayment of tax

required to be shown on a return if such underpayment is

attributable to negligence.   Section 6664(c)(1) provides that no

penalty shall be imposed if it is shown that there was reasonable

cause for the underpayment and that the taxpayer acted in good

faith.   The determination of whether a taxpayer acted with
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reasonable cause and in good faith depends upon the facts and

circumstances.   See sec. 1.6664-4(b)(1), Income Tax Regs.

Reliance on the advice of an accountant may demonstrate

reasonable cause and good faith.    See sec. 1.6664-4(b)(1), Income

Tax Regs.

     Petitioner contends that it complied with all record-keeping

obligations, provided Ford Motor Company Dealer Financial

Statements to the accountant, had other records available for

review, and relied in good faith on the advice of the accountant.

Petitioner, however, did not provide its accountant with

sufficient information from which an accurate return could be

prepared.   Under such circumstances, reliance on an accountant’s

advice is not in good faith and does not establish that the

taxpayer acted with reasonable cause.       See Estate of Monroe v.

Commissioner, 104 T.C. 352, 366-367 (1995).       Accordingly,

petitioner is liable for accuracy-related penalties relating to

1993 and 1994.

     To reflect the foregoing,


                                              Decision will be entered

                                         under Rule 155.
