Marco Deplano - Page 7

                                        - 7 -                                         
          interest payable with respect to that portion of the underpayment           
          attributable to negligence.                                                 
               "Negligence" is defined as a lack of due care or a failure             
          to act in a reasonable and prudent manner under the                         
          circumstances.  Freytag v. Commissioner, 89 T.C. 849, 887 (1987),           
          affd. 904 F.2d 1011 (5th Cir. 1990), affd. on another issue 501             
          U.S. 868 (1991).  Petitioner bears the burden of proving that his           
          actions in claiming the loss and credit were not negligent.  Rule           
          142(a); Freytag v. Commissioner, supra at 887.  "When considering           
          the negligence addition, we evaluate the particular facts of each           
          case, judging the relative sophistication of the taxpayers as               
          well as the manner in which the taxpayers approached their                  
          investment."  Turner v. Commissioner, T.C. Memo. 1995-363.  Under           
          certain circumstances, reliance on professional advice may                  
          provide an adequate excuse for a taxpayer's actions under section           
          6653(a); however "standing alone, [it] is not an absolute defense           
          to negligence, but rather a factor to be considered."  Freytag v.           
          Commissioner, supra at 888.  The taxpayer must show that his                
          expert had the relevant expertise and knowledge of pertinent                
          facts to give competent advice.  Goldman v. Commissioner, 39 F.3d           
          402, 408 (2d Cir. 1994), affg. T.C. Memo. 1993-480; Freytag v.              
          Commissioner, supra at 888.  "Reliance on expert advice is not              
          reasonable where the 'expert' relied on knows nothing about the             
          business in which the taxpayer invested."  Goldman v.                       
          Commissioner, supra at 408.  In addition, the taxpayer must not             




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011