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professional advice with regard to the investment in Irving & Co.
We disagree.
Under certain circumstances, reliance on the advice of a
competent professional adviser may overcome respondent's finding
of negligence. United States v. Boyle, 469 U.S. 241 (1985);
Freytag v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d
1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991). Reliance on
professional advice, standing alone, is not an absolute defense
to negligence, but rather a factor to be considered. Freytag v.
Commissioner, supra at 888. A taxpayer's reliance on
professional advice is an acceptable excuse from the negligence
additions to tax where such reliance was reasonable. United
States v. Boyle, supra.
Reliance on representations by insiders, promoters, or
offering materials generally is not an adequate defense to
negligence. Gollin v. Commissioner, T.C. Memo. 1996-454. A
taxpayer must be able to show that the adviser reached his or her
decision independently. Leonhart v. Commissioner, 414 F.2d 749
(4th Cir. 1969), affg. T.C. Memo. 1968-98. A taxpayer ordinarily
may not reasonably rely on someone with an inherent conflict of
interest. Goldman v. Commissioner, 39 F.3d 402, 408 (2d Cir.
1994), affg. T.C. Memo. 1993-480.
As the promoter of Irving & Co., Schneider had an inherent
conflict of interest. Whatever advice Schneider gave
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