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and (2) petitioners' intent in making the investment was to
obtain a stream of rental income generated from the resale and
reuse of recycled plastic.
When petitioners claimed the disallowed deductions and tax
credits, they had no knowledge of the plastics or recycling
industries and no engineering or technical background.
Petitioner did not independently investigate the economic
potential of the Sentinel EPE recyclers.
Under some circumstances a taxpayer may avoid liability for
the additions to tax under section 6653(a)(1) and (2) if
reasonable reliance on a competent professional adviser is shown.
Freytag v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d
1011 (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); Ewing v.
Commissioner, 91 T.C. 396, 423-424 (1988), affd. without
published opinion 940 F.2d 1534 (9th Cir. 1991); Pritchett v.
Commissioner, 63 T.C. 149, 174-175 (1974).
Reliance on representations by insiders, promoters, or
offering materials has been held an inadequate defense to
negligence. LaVerne v. Commissioner, 94 T.C. 637, 652-653
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