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and fully disclosed what he had done. The question here is
whether petitioners, themselves technologically proficient and
financially successful, actually and reasonably relied on the
accountant with respect to valuation problems requiring expertise
in engineering and plastics technology, or whether the accountant
gave the tax advice and facilitated the transaction, but did not
make a full and independent investigation of the relevant
business and technology, and did clearly inform his clients of
the limits of his knowledge and investigation of the transaction.
For reasons set forth below, we believe the latter statement more
accurately describes what happened here.
a. The Circumstances Under Which a Taxpayer May Avoid
Liability Under Section 6653(a)(1) and (2) Because of
Reasonable Reliance on Competent and Fully Informed
Professional Advice
A taxpayer may avoid liability for the additions to tax under
the provisions of section 6653(a) if he or she reasonably relied on
competent professional advice. United States v. Boyle, 469 U.S.
241, 250-251 (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 factor to be
considered. For reliance on professional advice to excuse a
taxpayer from the negligence additions to tax, the taxpayer must
show that such professional had the expertise and knowledge of the
pertinent facts to provide informed advice on the subject matter.
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