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Under some circumstances, a taxpayer may avoid liability for
the additions to tax under section 6653(a)(1) if reasonable
reliance on a competent professional adviser is shown. United
States v. Boyle, 469 U.S. 241 (1985); Freytag v. Commissioner, 89
T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd.
501 U.S. 868 (1991). In order for reliance on professional
advice to excuse a taxpayer from the negligence additions to tax,
the reliance must be reasonable, in good faith, and based upon
full disclosure. Freytag v. Commissioner, supra. Reliance on
representations by insiders, promoters, or offering materials
ordinarily constitutes an inadequate defense to negligence.
LaVerne v. Commissioner, 94 T.C. 637, 652-653 (1990), affd.
without published opinion 956 F.2d 274 (9th Cir. 1992), affd.
without published opinion sub nom. Cowles v. Commissioner, 949
F.2d 401 (10th Cir. 1991); Marine v. Commissioner, 92 T.C. 958,
992-993 (1989), affd. without published opinion 921 F.2d 280 (9th
Cir. 1991). Reliance on a professional adviser can be inadequate
when the taxpayer and his adviser knew nothing about the nontax
business aspects of the venture. Beck v. Commissioner, 85 T.C.
557 (1985); Flowers v. Commissioner, 80 T.C. 914 (1983).
The facts in the instant case speak for themselves.
Petitioner failed to adequately investigate Century Concepts and
failed to elicit the services of a professional adviser before
participating in the leasing program. We will not belabor the
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