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802. In other words, reliance upon expert advice will not
exculpate a taxpayer who supplies the return preparer with
incomplete or inaccurate information. Lester Lumber Co. v.
Commissioner, 14 T.C. 255, 263 (1950).
In this decision, except for the consulting fee issue, among
the rules or regulations to be considered for applying the
negligence penalty are section 6038A and the accompanying
regulations.
Respondent argues that petitioner did not keep the records
required by section 6038A and did not provide an authorization of
agent when repeatedly asked to do so by respondent. Respondent
argues that petitioner ignored the requirements of section 6038A
by not keeping records from which respondent could determine the
correct tax treatment of transactions between petitioner and
ASAT, Ltd., citing section 1.6038A-3(a)(1), Income Tax Regs.
Respondent points out that petitioner's 1990 tax return preparer,
a C.P.A. from Deloitte & Touche, informed petitioner in writing
that it "noted concern" in the level of documentation and in
intercompany pricing. Respondent further argues that petitioner
has not introduced any evidence that it has reasonable cause for
failure to comply with section 6038A.
Petitioner argues that:
The evidence adduced at bar demonstrates that
Petitioner was not negligent. * * *
Petitioner charged a 6% commission rate to ASAT,
Ltd. The average commission rate is 5%. Under all the
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