T.C. 473, 489 (1972); Enoch v. Commissioner, 57 T.C. 781, 803
(1972); see Ma-Tran Corp. v. Commissioner, 70 T.C. 158, 173
(1978).
Petitioners claimed to have relied solely on their
accountant. Such reliance, to mitigate negligence, must be
reasonable. Petitioners are college- and medical school-educated
individuals who pursued rental and charter activities with the
sole or primary purpose of off-setting ordinary income from their
professional activities. They paid little attention to
information provided by the promoter, and they did not make
business plans or seek professional advice regarding their rental
and charter activities. Petitioners' accountant was not shown to
have expertise in the boat charter business, nor did petitioners
show that their reliance on him was reasonable under the
circumstances. After making the investment in the fishing boat,
petitioners paid little or no attention to the major asset of
their activity, a boat with a value approaching $200,000. All
that mattered to them were the deductions.
With respect to their sailboat and Tahoe property, those
assets were available for petitioners' personal use and no
meaningful efforts were made to seek a profit or to improve the
circumstances after repeated losses and lack of rental income
were experienced. Petitioners' claim of reliance upon their
accountant or return preparer does not entitle them to avoid the
imposition of an addition to tax for their negligence.
Accordingly, we find that petitioners are liable for an
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