Derwyn Joseph Booker - Page 13

                                       - 13 -                                         
               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              






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011