Wallace R. Noel and Robinette Noel - Page 27

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          to do what a reasonable and ordinarily prudent person would do              
          under the circumstances."  Neely v. Commissioner, 85 T.C. 934,              
          947 (1985) (quoting Marcello v. Commissioner, 380 F.2d 499, 506             
          (5th Cir. 1967)).                                                           
               A taxpayer can avoid liability for the accuracy-related                
          penalty if he engages a competent professional to prepare his               
          return, and he reasonably relies on the advice of that                      
          professional.  Freytag v. Commissioner, 89 T.C. 849, 888 (1987),            
          affd. 904 F.2d 1011, 1017 (5th Cir. 1990), affd. 501 U.S. 868               
          (1991).  The taxpayer must show that he provided all relevant               
          information to the professional.  Pessin v. Commissioner, 59 T.C.           
          473, 489 (1972).                                                            
               Petitioner engaged Wayne Hoover, a C.P.A. with over 20 years           
          of experience, to prepare his 1990 and 1991 Federal income tax              
          returns.  Petitioner was a longtime client of Mr. Hoover's and              
          heavily relied on Mr. Hoover's advice.  After discussing the                
          facts with petitioner, Mr. Hoover advised petitioner to exclude             
          income under section 104(a)(2) and include the contingent legal             
          fees in his PMI stock basis.  Since the burden of proof is on               
          respondent, she must prove that petitioner failed to provide                
          relevant information to Mr. Hoover and that petitioner's reliance           
          on Mr. Hoover was improper.  Respondent has failed to meet this             
          burden.  The penalties for 1990 and 1991 are not sustained.                 
                                             Decision will be entered under           
                                        Rule 155.                                     




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