- 8 -
tax consequences. Petitioners introduced no evidence regarding
Mr. Baker’s credentials or his knowledge and experience in
preparing tax returns or analyzing trust arrangements for Federal
income tax purposes. In short, petitioners failed to prove that
Mr. Baker was a competent tax adviser and that petitioners were
justified in relying on him. See Ewing v. Commissioner, 91 T.C.
396, 423 (1988), affd. without published opinion 940 F.2d 1534
(9th Cir. 1991); sec. 1.6664-4(b), Income Tax Regs.
In addition, petitioner admitted at trial and conceded on
brief that Mr. Baker did not have all the necessary information
to complete the returns properly. There is no evidence that
petitioners gave Mr. Baker copies of the trust documents or other
information that would have allowed Mr. Baker to evaluate the
legitimacy of the trusts or analyze the tax consequences of the
trusts.
Because petitioners failed to prove they reasonably relied
on a fully informed and competent tax adviser and because they
did not assert any other basis for obtaining relief from the
section 6662(a) penalty, we hold that petitioners have failed to
prove that they had reasonable cause within the meaning of
section 6664(c).4 We, therefore, sustain respondent’s
4We note that petitioners did not argue that they relied on
NTS for accurate tax advice, nor did petitioners establish that
NTS was a competent professional or was composed of competent
professionals with expertise in tax matters.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011