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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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