- 12 -
(5th Cir. 1990), affd. 501 U.S. 868 (1991). Reliance on
professional advice, standing alone, is not an absolute defense
to negligence, but rather a factor to be considered. Id. In
order for reliance on professional advice to excuse a taxpayer
from the negligence additions to tax, the reliance must be
reasonable, in good faith, and based upon full disclosure. Id.;
see Weis v. Commissioner, 94 T.C. 473, 487 (1990). Taxpayers
must be able to show that the adviser reached his or her
decisions independently. See Leonhart v. Commissioner, 414 F.2d
749, 750 (4th Cir. 1969), affg. T.C. Memo. 1968-98. We have
rejected pleas of reliance when neither the taxpayer nor the
advisers purportedly relied upon by the taxpayer knew anything
about the nontax business aspects of the contemplated venture.
Beck v. Commissioner, 85 T.C. 557 (1985); Flowers v.
Commissioner, 80 T.C. 914 (1983). Reliance on representations
by insiders, promoters, or offering materials has been held an
inadequate defense to negligence. Illes v. Commissioner, 982
F.2d 163, 166 (6th Cir. 1992), affg. per curiam T.C. Memo. 1991-
449; LaVerne v. Commissioner, 94 T.C. 637, 652-653 (1990), affd.
without published opinion 956 F.2d 274 (9th Cir. 1992), affd.
without published opinion sub nom. Cowles v. Commissioner, 949
F.2d 401 (10th Cir. 1991); Marine v. Commissioner, 92 T.C. 958,
992-993 (1989), affd. without published opinion 921 F.2d 280
(9th Cir. 1991); McCrary v. Commissioner, 92 T.C. 827, 850
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011