Inverworld, Inc., et al. - Page 165

                                                - 240 -                                                   
            years ended 1987 through 1989, that LTD is liable as a                                        
            withholding agent for withholding tax on the dividend it paid to                              
            its shareholders in calendar years 1985 and 1986, and that INC is                             
            not liable as a withholding agent for withholding tax.  Pursuant                              
            to Emmons v. Commissioner, supra, we hold that LTD’s failure to                               
            file timely income tax returns for taxable years ended June 30,                               
            1987 through 1989 and LTD’s failure to file withholding tax                                   
            returns for calendar years 1985 and 1986 are prima facie cases of                             
            negligence.  Petitioners have not come forward with sufficient                                
            evidence; i.e., they have not "overcome" or "put in equilibrium"                              
            such a prima facie case.  Id. at 349, and the cases cited                                     
            therein.  As to LTD, petitioners did not proffer evidence tending                             
            to meet or to rebut respondent's prima facie cases of negligence.                             
            Consequently, we sustain respondent's determinations that LTD, as                             
            to its corporate income tax returns for taxable years ended June                              
            30, 1987 through 1989, and its withholding tax returns for                                    
            calendar years 1985 and 1986, was negligent.                                                  
                  As to INC's income tax returns and Holdings' income tax                                 
            returns, petitioners contend that reliance upon experienced                                   
            advisers relieves them from the addition to tax for negligence.                               
            Petitioners, however, have not provided sufficient evidence to                                
            prove that such reliance was reasonable.  Ewing v. Commissioner,                              
            supra; Freytag v. Commissioner, supra.  Consequently, we sustain                              
            respondent's determination of section 6653 additions to tax for                               
            INC and Holdings.                                                                             





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