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Petitioner contends that he was not negligent because (1) he
reasonably relied upon the advice of independent advisers and (2)
he reasonably expected to make a profit from his purchase of the
Sentinel EPE and EPS recyclers. Respondent, on the other hand,
contends that petitioner's reliance on Ulanoff, Burstein, WMDI,
and Boylan & Evans was not reasonable, and that it was not
reasonable for petitioner to expect to profit from his purchase
of the Sentinel recyclers.
Under some circumstances, a taxpayer may avoid liability for
negligence if reasonable reliance on a competent professional
adviser is shown. 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. Freytag v. Commissioner, supra. For reliance on
professional advice to excuse a taxpayer from negligence, the
taxpayer must show that the professional had the requisite
expertise, as well as 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.
Reliance on representations by insiders or promoters has
been held an inadequate defense to negligence. Goldman v.
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