- 52 -
and that they show that they followed that advice. Zfass v.
Commissioner, 118 F.3d 184 (4th Cir. 1997), affg. T.C. Memo.
1996-167. Petitioners failed on all these counts in the instant
case. We do not credit petitioners’ contention that they relied
on Henry’s advice.
Petitioners point out that respondent did not dispute their
1983, 1984, and 1985 theft/casualty deductions and carryovers.
Respondent’s failure to audit merely results in an apparent
windfall to petitioners; it does not relieve petitioners from
their obligation to act prudently and obtain advice from
competent tax counsel.18
We conclude, and we have found, that petitioners were
negligent in claiming the theft/casualty carryover deductions for
each of the years in issue.
For each of the years in issue the entire deficiency in tax
is due to petitioners’ negligence in claiming the theft/casualty
carryover deduction. For each of the years in issue the
deficiency is equal to the “underpayment of tax”, which is the
18 We have held that, under some circumstances, an audit
for an earlier year and a concession by the Commissioner that the
corresponding deduction for the earlier year was correct, might
relieve a taxpayer from the obligation to thereafter obtain
advice from competent tax counsel. See, e.g., Bermingham v.
Commissioner, T.C. Memo. 1994-69; see also Washburn v.
Commissioner, 44 T.C. 217, 225-226 (1965). There was no such
audit in the instant case, and no apparent approval by respondent
as to the claimed theft/casualty loss deductions.
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