Thai V. Pham and Khuy T. Bui - Page 18

                                       - 18 -                                         
          or intentional disregard of rules or regulations.  Petitioners              
          claim that they are not liable for this addition to tax because             
          they relied upon their accountant to prepare their 1988 return.             
               Section 6653(a) imposes an addition to tax equal to 5                  
          percent of the underpayment of tax if any part of the                       
          underpayment is due to negligence or intentional disregard of               
          rules or regulations.  Negligence is a lack of due care or                  
          failure to do what a reasonable and ordinarily prudent person               
          would do under the circumstances.  Marcello v. Commissioner, 380            
          F.2d 499, 506 (5th Cir. 1967), affg. in part and remanding in               
          part 43 T.C. 168 (1964); Neely v. Commissioner, 85 T.C. 934, 947            
          (1985).  Petitioners must rebut the presumption of correctness by           
          showing that the addition to tax is unjustified.  Rule 142(a);              
          Bixby v. Commissioner, 58 T.C. 757 (1972).                                  
               Good faith reliance on the advice of a competent,                      
          independent tax professional may offer relief from the imposition           
          of the negligence addition.  United States v. Boyle, 469 U.S.               
          241, 251 (1985); Otis v. Commissioner, 73 T.C. 671, 675 (1980).             
          Petitioners bear the burden of proving that their reliance on               
          professional advice was reasonable.  Freytag v. Commissioner, 89            
          T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd.            
          501 U.S. 868 (1991).  Moreover, reliance on professional advice,            
          standing alone, is not an absolute defense to negligence but                
          rather a factor to be considered.  Id.                                      
               In order for the reliance on professional advice to excuse a           




Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  Next

Last modified: May 25, 2011