- 26 - enough information to ensure proper compliance with those laws. Although MBS failed to do its job properly, petitioner concludes, petitioner’s reliance on them to do a proper job was consistent with ordinary business care and prudence under the circumstances. We do not agree. Reasonable reliance on a tax adviser is consistent with ordinary business care and prudence only in certain cases. In those cases, the taxpayer must establish that: (1) The adviser had sufficient expertise to justify reliance, (2) the taxpayer provided necessary and accurate information to the adviser, and (3) the taxpayer actually relied in good faith on the adviser’s judgment. See, e.g., Ellwest Stereo Theatres of Memphis, Inc. v. Commissioner, T.C. Memo. 1995-610. Mr. Shindel prepared and signed petitioner’s tax returns for the years in issue. His experience and qualifications were sufficient to warrant reliance upon his judgement. Although it appears that petitioner has met the first prong, we find that it has failed to satisfy the remaining prongs. To the contrary, the record indicates that petitioner did not exercise due care, and it failed to do what a reasonable and ordinarily prudent person would have done under the circumstances. Petitioner claimed erroneous deductions for legal expenses and interest expenses. Petitioner also filed its tax returns untimely. In the latter regard, petitioner knew it was required to file timely a FederalPage: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: May 25, 2011