Joseph P. and Marilyn Schneller - Page 12

          be liable for the accuracy-related penalty because they did not                    
          review their 1990 return, but rather relied on their accountant,                   
          Mr. Arthur.                                                                        
                “The voluntary failure to read a return and blind reliance on                
          another for the accuracy of a return are not sufficient bases to                   
          avoid liability for negligence additions to tax.”  Bollaci v.                      
          Commissioner, T.C. Memo. 1991-108 (citing Bagur v. Commissioner, 66                
          T.C. 817, 823-824 (1976), remanded on other grounds 603 F.2d 491                   
          (5th Cir. 1979)).  Taxpayers have a duty to read a return and make                 
          sure all income items are included.  Magill v. Commissioner, 70                    
          T.C. 465, 479-480 (1978), affd. 651 F.2d 1233 (6th Cir. 1981)                      
          (citing Bailey v. Commissioner, 21 T.C. 678, 687 (1954)).  The                     
          accuracy-related penalty under section 6662(a) does not apply to                   
          any portion of an underpayment if it is shown that there was                       
          reasonable cause for such portion and if the taxpayer acted in good                
          faith.  Tippin v. Commissioner, 104 T.C. 518, 533-534 (1995).                      
                Petitioners claim that they were completely ignorant of what                 
          appeared on their tax returns, which were prepared by an                           
          accountant.  We do not believe them.  We observed petitioner while                 
          testifying and found him to be financially astute.  Despite                        
          petitioner’s limited formal education, he built a highly successful                
          nationwide company.5  Obviously, petitioners knew about the                        
          writeoff.  In our opinion, both petitioner and his wife possessed                  

                5    Petitioner attempted to portray himself as a “country                   
          bumpkin”, but we believe he was “sly as a fox”.                                    

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