Inverworld, Inc., et al. - Page 159

                                                - 235 -                                                   
            LTD’s failure to file withholding tax returns for calendar years                              
            1985 and 1986 were due to reasonable cause and not due to willful                             
            neglect.                                                                                      
                  Petitioners seek to establish reasonable cause by showing                               
            their reliance on the opinion of their tax counsel.  Petitioners                              
            cite Haywood Lumber & Mining Co. v. Commissioner, 178 F.2d 769,                               
            771 (2d Cir. 1950), modifying 12 T.C. 735 (1949) in which the                                 
            court stated that "When a corporate taxpayer selects a competent                              
            tax expert, supplies him with all necessary information, and                                  
            requests him to prepare proper tax returns, we think the taxpayer                             
            has done all that ordinary business care and prudence can                                     
            reasonably demand."  Petitioners contend that LTD and INC                                     
            provided full disclosure of all relevant facts to their                                       
            accountants and tax lawyers, and the returns prepared by such                                 
            professionals in accordance with such facts constitute tax advice                             
            upon which LTD and INC may, in good faith, reasonably rely and                                
            not be subjected to additions to tax for failure to file a                                    
            return.                                                                                       
                  We conclude that petitioners have not met their burden of                               
            proof.  Petitioners have presented no evidence of receiving                                   
            advice from either an accountant or an attorney that filing a                                 
            return was unnecessary.  The record contains one letter, dated                                
            December 18, 1984, in which Mr. Bricker writes "in response" to                               
            Deloitte's questions as to whether LTD "is subject to United                                  
            States income tax."  Mr. Bricker concludes that LTD "is not                                   
            subject to United States tax other than on any 'fixed or                                      




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