-6-
380 F.2d 499, 506-507 (5th Cir. 1967), affg. in part and remanding
in part 43 T.C. 168 (1964); Neely v. Commissioner, 85 T.C. 934, 947
(1985).
Petitioner specialized in hematology. He believed that
studying the bloodline and genetic profile of thoroughbred horses
could identify future champion racehorses, and he acquired
interests in racehorses, in part, to prove his theory. He credibly
testifed as to his belief that the development of the bloodline of
a thoroughbred horse was a "scientific endeavor".
Petitioners' accountant, Mr. Judge, advised them that they
could deduct the purchase price of petitioner's interests in the
racehorses as a research and experimental expense for 1991.
Reasonable reliance on a professional in such a matter can shield
a taxpayer from a finding of negligence. Horn v. Commissioner, 90
T.C. 908, 942 (1988); Daoust v. Commissioner, T.C. Memo. 1994-203.
We believe that petitioners' reliance on Mr. Judge was in good
faith.
Further, petitioners had claimed such a deduction for earlier
years, and when these returns were audited, such deductions were
not disallowed.
Although the situation involved herein is a close case, we
believe petitioners were not negligent. Accordingly, we hold that
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