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testimony is also clear that he determined the tax treatment of
the American Valmar and Markovski deposits based on what
Markovski told him about the nature of those deposits. With
respect to the American Valmar deposits, Bolonik testified that,
in setting up American Valmar’s books and records, he had
conversations with Markovski about the nature of the
corporation’s business and the books and records reflected those
discussions. With respect to the Markovski deposits, Mr. Bolonik
testified that he believed that those deposits did not constitute
items of gross income during the years received based on
Markovski’s statements to him that those sums had been earned
before Markovski moved to the United States. In substantial
part, petitioners have failed to prove their version of the facts
concerning the American Valmar and Markovski deposits. Bolonik’s
advice, thus, was faulty, and petitioners can rely on it to
establish reasonable cause and good faith only if such reliance
was reasonable and they acted in good faith. Reasonable cause
and good faith may be established by a showing of an honest
misunderstanding of fact. Petitioners have failed to convince us
of what actually transpired here. They have, thus, failed to
convince us that they honestly misunderstood any facts. We are
not convinced--i.e, petitioners have failed to prove--that there
was reasonable cause for their underpayment and that they acted
in good faith in determining their income tax liabilities with
respect to the American Valmar and Markovski deposits. We
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