- 45 -
facts and circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs.
The most important factor is the extent of the taxpayer's effort
to assess his or her proper tax liability. Id.
Reliance on a return preparer, however, may relieve a
taxpayer from the addition to tax for negligence where the
taxpayer's reliance is reasonable. Freytag v. Commissioner, 89
T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd.
501 U.S. 868 (1991). A taxpayer, however, is not relieved from
liability for the addition to tax for negligence merely by
shifting the responsibility to a tax professional. Enoch v.
Commissioner, 57 T.C. 781, 802 (1972). Reliance on an expert is
not an absolute defense but is a factor to be considered.
Freytag v. Commissioner, supra at 888. A taxpayer's reliance
must be in good faith and demonstrably reasonable. Ewing v.
Commissioner, 91 T.C. 396, 423 (1988), affd. without published
opinion 940 F.2d 1534 (9th Cir. 1991); Freytag v. Commissioner,
supra at 888-889. In such a case, a taxpayer will be entitled to
rely upon an expert's advice, even if the advice should prove to
be erroneous. Jackson v. Commissioner, 86 T.C. 492, 539 (1986),
affd. on other issues 864 F.2d 1521 (10th Cir. 1989); Brown v.
Commissioner, 47 T.C. 399, 410 (1967), affd. per curiam 398 F.2d
832 (6th Cir. 1968).
The ultimate responsibility for a correct return lies with
the taxpayer, who must furnish the necessary information to the
agent who prepared the return. Enoch v. Commissioner, supra at
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