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entities with respect to investments in the United States;
Addington specializes in estate planning and administration; and
Cohn specializes in real estate law and has advised foreign
investors with respect to joint ventures and real estate
investments in the United States. These sophisticated attorneys
ultimately relied upon another attorney to investigate the tax
law and the underlying business circumstances of a proposed
investment, the success of which depended upon a purportedly
technologically unique machine. The attorney allegedly relied
upon by petitioners had no expertise in plastics materials or
plastics recycling and stressed to petitioners that he was not an
investment analyst. In the end, he relied upon the offering
materials and persons connected to the transactions for the value
of the machine, and fully disclosed the limitations of his
investigation to petitioners.
a. The Circumstances Under Which a Taxpayer
May Avoid Liability Under Section 6653(a)(1)
and (2) Because of Reasonable Reliance on
Competent and Fully Informed Professional
Advice
A taxpayer may avoid liability for the additions to tax
under section 6653(a)(1) and (2) if he or she reasonably relied
on competent professional advice. 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). However, a taxpayer bears the responsibility for any
negligent errors of his or her professional adviser. See
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