- 48 -
Petitioners contend that respondent should waive this
addition to tax because they relied on professional advice and
acted in good faith. Sec. 6661(c); see Mailman v. Commissioner,
91 T.C. 1079, 1082-1084 (1988). We disagree for reasons stated
at par. C-4, above. The mistakes on their return were not Davis'
fault. Petitioners did not convince us that they acted in good
faith in failing to report income from the 282 checks,
withdrawals from the First Citizens accounts for personal
purposes, and the John Chavis checks.
Reaves Livestock did not give Davis all of the information
about the 282 checks, the First Citizens accounts, and the John
Chavis checks. Thus, the mistakes on the Reaves Livestock
returns were not his fault.
We conclude that Mr. and Mrs. Reaves and Reaves Livestock
are liable for the addition to tax for substantial understatement
of tax for 1984, 1985, 1986, and 1987, if calculations under Rule
155 show that the understatements are substantial for purposes of
section 6661(a).
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