Ellwest Stereo Theatres of Memphis, Inc., et al. - Page 15

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                  There is no evidence in the record that Modern’s accountants                             
            and attorney possessed, or reasonably appeared to possess,                                     
            sufficient relevant expertise to warrant reliance on their                                     
            judgment.  The only evidence petitioners did present on this                                   
            subject would support an inference to the contrary.  Shindel                                   
            testified that Tompkins, the accountant employed by Modern to                                  
            handle most return preparation, had failed the C.P.A.                                          
            examination.  Whether Klein’s field of legal expertise included                                
            tax matters remains unclear.  No one associated with Modern                                    
            impressed Shindel as being competent to handle the tax questions                               
            at issue.                                                                                      
                  There is no evidence that expert advice regarding the                                    
            foreign payments was solicited by or on behalf of any of                                       
            petitioners before Shindel conducted his investigation.  The                                   
            record does not establish when Shindel sought and received the                                 
            expert tax attorneys’ advice:  at one point his testimony fixes                                
            the start of his consultations with them in early 1990, and at                                 
            another point, in late 1991 or 1992.  The Forms 1042 for the last                              
            year of payments would have been due by March 15, 1992.  Sec.                                  
            1.1461-2(b)(1), Income Tax Regs.  There is no record of what the                               
            tax attorneys advised Shindel, nor to which payments and which                                 
            tax years the advice related.  Shindel’s testimony is ambiguous                                
            as to the identity of the clients on whose behalf he consulted                                 
            the tax attorneys.  There is no evidence that petitioners                                      
            solicited, authorized, or were cognizant of Shindel’s                                          

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