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6659, a section 6661 addition to tax may be waived by the
Commissioner if the taxpayer demonstrates that there was
reasonable cause for his underpayment and that he acted in good
faith. Sec. 6661(c). The taxpayer in Mauerman relied upon
independent attorneys and accountants for advice as to whether
payments were properly deductible or capitalized. The advice
relied upon by the taxpayer in Mauerman was within the scope of
his advisers' expertise, the interpretation of the tax laws as
applied to undisputed facts. Particularly with respect to
valuation, petitioners in these cases relied upon advice that was
outside the scope of expertise and experience of their advisers.
Consequently, we consider petitioners' reliance on the Mauerman
case inapplicable.
We hold that petitioners did not have a reasonable basis for
the adjusted bases or valuations claimed on their tax returns
with respect to their investments in Empire. In these cases,
respondent properly could find that petitioners' respective
reliance on Gallagher and the offering materials was
unreasonable. The records in these cases do not establish an
abuse of discretion on the part of respondent but support
respondent's position. We hold that respondent's refusal to
waive the section 6659 addition to tax is not an abuse of
discretion. Petitioners are liable for the respective section
6659 additions to tax at the rate of 30 percent of the
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