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Petitioners contend that they were not negligent because
they reasonably relied in good faith upon the advice of a
qualified, independent adviser, to whom they made full
disclosure. In addition, petitioners contend that they were not
negligent because they reasonably expected to make a profit from
their investment in Sunbelt. Respondent, on the other hand,
contends that petitioners were negligent because their reliance
on Storey was not reasonable and they failed to investigate the
investment.
Under some circumstances a taxpayer may avoid liability for
the additions to tax under sections 6653(a)(1) and (2) 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 the negligence additions to tax, the taxpayer must show that
the 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.
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