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penalty under section 6653 is correctly assessed in cases where
claimed deductions are not supported by the facts. Sandvall v.
Commissioner, 898 F.2d 455 (5th Cir. 1990), affg. T.C. Memo.
1989-56 and T.C. Memo. 1989-189; Marcello v. Commissioner, 380
F.2d 499 (5th Cir. 1967), affg. in part and remanding in part 43
T.C. 168 (1964).
Petitioners contend that they acted in a reasonable manner
and exercised ordinary business care and prudence in claiming
deductions and credits with respect to their participation in
Encore. In support of their contentions, petitioners allege that
they relied upon the financial advice of qualified advisers.
Specifically, petitioners argue that they relied on the advice of
two individuals, Mr. Aaron Howell and Mr. Derwyn Booker.
According to petitioners, Howell has over 20 years' experience as
a professional entertainer and has some experience in the
recording industry. Mr. Booker was petitioners' investment
counselor and was a paid promoter for Encore.2
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). Reliance on professional advice, standing
alone, is not an absolute defense to negligence, but rather a
2See Booker v. Commissioner, supra.
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