Alexander M. Moye and Judy H. Moye - Page 25

                                                                               - 25 -- 25 -                                                                                

                              Petitioners contend that they had reasonable cause to take                                                                                   
                    the position on their return that their police dog training                                                                                            
                    business was not incorporated in 1990.  They contend that they                                                                                         
                    acted in good faith and relied on Oddo.  We disagree.  To show                                                                                         
                    good faith reliance on the advice of a competent adviser, the                                                                                          
                    taxpayer must show:  (1) That he or she gave the return preparer                                                                                       
                    complete and accurate information, (2) that an incorrect return                                                                                        
                    was a result of the preparer's mistakes, and (3) that the                                                                                              
                    taxpayer believed in good faith that he or she was relying on the                                                                                      
                    advice of a competent return preparer.  Metra Chem Corp. v.                                                                                            
                    Commissioner, 88 T.C. 654, 662 (1987); Pessin v. Commissioner, 59                                                                                      
                    T.C. 473, 489 (1972).                                                                                                                                  
                              Petitioners did not give Oddo full details or complete and                                                                                   
                    accurate information about those transactions.  They did not tell                                                                                      
                    him that they transferred land to Rosewood Kennels, Inc., that it                                                                                      
                    borrowed $500,000, and that it did business as a corporation in                                                                                        
                    1990.  Thus, they are not entitled to rely on his advice.  Metra                                                                                       
                    Chem Corp. v. Commissioner, supra.                                                                                                                     
                              Petitioners rely on Larotonda v. Commissioner, 89 T.C. 287                                                                                   
                    (1987).  The taxpayer in Larotonda reasonably, but erroneously,                                                                                        
                    assumed that an involuntary assignment of the taxpayer's Keogh                                                                                         
                    account was not income.  That case involved essentially a                                                                                              
                    technical or legal question.  In contrast, the issue here is                                                                                           
                    essentially factual; i.e., whether petitioners knew that Rosewood                                                                                      





Page:  Previous  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  Next

Last modified: May 25, 2011