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the duty of filing accurate returns cannot be avoided by placing
responsibility on an agent. Pritchett v. Commissioner, 63 T.C.
149, 174 (1974). As was recently pointed out by the Court of
Appeals for the Fifth Circuit, reliance on a professional must be
reasonable, and the professional must have the necessary
information regarding the matter upon which his or her advice is
given. See Chamberlain v. Commissioner, 66 F.3d 729 (5th Cir.
1995), affg. in part and revg. in part T.C. Memo. 1994-228.
Stewart Goodson, the certified public accountant who
prepared the returns here, testified that John Gwaltney, DRPC's
accountant, told him to treat loans listed on the financial
statements as coming from the bank as loans from petitioner, and
that such loans were in fact from petitioner. Mr. Goodson, an
agent of DRPC, thus treated the loans as loans from petitioner.
In light of our finding that there was no separate loan from
petitioner to the corporation, we find that petitioner's reliance
on Mr. Goodson was not reasonable, as based on inaccurate
information that Mr. Goodson made no effort to verify, and that
appears to have been furnished to him on petitioner's
instructions. See Zermeno v. Commissioner, T.C. Memo. 1991-550.
Substantial Understatement
Respondent determined that petitioners are liable for an
addition to tax under section 6661 for substantial
understatements of tax. Section 6661 provides for an addition to
tax equal to 25 percent of the amount of any underpayment
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