Mr. Stanhope has an MBA degree from Stanford University and has successfully operated a business for 18 years. The revenue agent who audited Mr. Stanhope's Form 1040 discovered a glaring error resulting in a $17,500 underpayment of tax. When questioned by the revenue agent about the error, Mr. Stanhope just shrugged and offered no logical explanation.

Required:

If the error resulted from Mr. Stanhopes blatant disregard of a tax rule, compute the penalty for negligence.

Is Mr. Stanhope's level of education and business experience likely to be a factor considered by the revenue agent in determining negligence?