- 40 -
and (2) Because of Reasonable Reliance on
Competent and Fully Informed Professional
Advice
A taxpayer may avoid liability for the additions to tax
under section 6653(a)(1) and (2) if he or she reasonably relied
on competent professional advice. United States v. Boyle, 469
U.S. 241, 250-251 (1985); Freytag v. Commissioner, 89 T.C. 849,
888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S.
868 (1991). Reliance on professional advice, standing alone, is
not an absolute defense to negligence, but rather a factor to be
considered. For reliance on professional advice to excuse a
taxpayer from the negligence additions to tax, the taxpayer must
show that such professional had the expertise and knowledge of
the pertinent facts to provide informed advice on the subject
matter. David v. Commissioner, 43 F.3d 788, 789-790 (2d Cir.
1995), affg. T.C. Memo. 1993-621; Goldman v. Commissioner, 39
F.3d 402 (2d Cir. 1994), affg. T.C. Memo. 1993-480; Freytag v.
Commissioner, supra; Sacks v. Commissioner, T.C. Memo. 1994-217,
affd. 82 F.3d 918 (9th Cir. 1996); Kozlowski v. Commissioner,
T.C. Memo. 1993-430, affd. without published opinion 70 F.3d 1279
(9th Cir. 1995); see also Stone v. Commissioner, T.C. Memo. 1996-
230; Reimann v. Commissioner, T.C. Memo. 1996-84.
Reliance on representations by insiders, promoters, or
offering materials has been held an inadequate defense to
negligence. Goldman v. Commissioner, supra; Pasternak v.
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