- 21 -
the Internal Revenue Service. Adequate disclosure includes a
properly completed and filed Form 8275–R. Sec. 1.6662-3(c)(2),
Income Tax Regs. Petitioners filed a Form 8275-R to disclose
their position regarding the deductibility of interest.
With respect to the section 469 issue, petitioners did not
attempt disclosure and, in any event, the disclosure exception
under section 1.6662-3(c)(1), Income Tax Regs., does not apply.
Sec. 1.6662-3(c)(1), Income Tax Regs. We are satisfied from the
testimony, however, that petitioners relied on the advice of
Miller with respect to the passive activity losses that they
claimed. We conclude that petitioners are not liable for the
accuracy-related penalties imposed under section 6662.
We have considered all of the remaining arguments that have
been made by petitioners for a result contrary to that expressed
herein, and, to the extent not discussed above, they are without
merit.
To reflect the foregoing,
Decision will be entered
for respondent as to the
deficiencies and for
petitioners as to the
accuracy-related penalties.
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