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taxpayer believed in good faith that he was relying on the advice
of a competent return preparer. Metra Chem Corp. v.
Commissioner, supra.
Petitioner relies on section 1.6664-4(b)(2), Example (l),
Income Tax Regs., to establish good faith reliance:
A, an individual calendar year taxpayer, engages B, a
tax professional, to give him advice concerning the
deductibility of certain state and local taxes. A
provides B with full details concerning the taxes at
issue. B advises A that the taxes are fully
deductible. A, in preparing his own tax return, claims
a deduction for the taxes. Under these facts, A is
considered to have demonstrated good faith by seeking
the advice of a tax professional, and to have shown
reasonable cause for any underpayment attributable to
the deduction claimed for the taxes. However, if A had
sought advice from someone that he knew, or should have
known, lacked knowledge in federal income taxation, A
would not be considered to have shown reasonable cause
or to have acted in good faith.
Petitioner argues that it is not liable for the penalty
because the facts in the instant case are the same as the facts
in the example. Petitioner's argument, however, is contradicted
by the evidence. Jump did not provide Northcutt with full
details or complete and accurate information concerning the
transactions in issue. Northcutt testified that she did not see
the agreements for the equipment acquisitions entered into by
UCI.
In addition, Jump relied on Northcutt for “accounting”
advice rather than for “tax” advice. Jump testified:
Q In giving it [the question about the leases] to
her, did you anticipate she would render tax advice?
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