- 58 -
cialist and that he relied on the advice of their accountant in
offsetting those losses against nonpassive income. A taxpayer's
duty to file an accurate return cannot be avoided by placing
responsibility on an agent. Pritchett v. Commissioner, 63 T.C.
149, 174 (1974). Each taxpayer has a duty to comply with the
Federal income tax laws and to become familiar with those laws.
A taxpayer may avoid the imposition of the accuracy-related
penalty by demonstrating that he or she relied on the advice of a
tax professional and that such reliance was reasonable and in
good faith. Sec. 1.6664-4(b)(1), Income Tax Regs. In order for
reliance on the advice of a tax professional to be reasonable,
the taxpayer must establish that correct information was provided
to the professional and that the item incorrectly reported in the
return was the result of the professional's error. See Ma-Tran
Corp. v. Commissioner, 70 T.C. 158, 173 (1978). The taxpayer
must also prove that a reasonable person would have relied upon
the advice provided. See Illes v. Commissioner, 982 F.2d 163,
166 (6th Cir. 1992), affg. per curiam T.C. Memo. 1991-449.
Petitioners failed to call their accountant as a witness to
explain what information petitioners may have provided him or
what advice he may have given them regarding the use of losses
28(...continued)
the accuracy-related penalties for 1989 and 1990 only to the
extent that they relate to their having used the reported losses
from petitioner's rental activity at Crestwood to offset non-
passive income.
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