- 32 -
Under some circumstances, a taxpayer may avoid liability for
negligence because of the taxpayer's reasonable reliance on a
competent professional adviser. See 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, reliance on professional advice, standing
alone, is not an absolute defense to negligence; rather it is a
factor to be considered. See Freytag v. Commissioner, supra.
Petitioners claim that petitioner relied on representations
by Burstein and Ulanoff regarding the uniqueness of the Sentinel
EPE recyclers. However, petitioner did not independently obtain
these individuals' advice but rather received their reports as
part of the promotional material that he received from
Clearwater. Burstein and Ulanoff were paid to promote the
Plastics Recycling leasing programs and, in particular, the
Clearwater investment. Reliance on representations by insiders,
8(...continued)
possessed the requisite expertise and knowledge of the pertinent
facts regarding the Clearwater transactions to provide informed
advice on the claimed partnership losses and tax credits, see
David v. Commissioner, 43 F.3d 788, 789-790 (2d Cir. 1995), affg.
per curiam T.C. Memo. 1993-621; Goldman v. Commissioner, 39 F.3d
402 (2d Cir. 1994), affg. T.C. Memo. 1993-480; Freytag v.
Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th
Cir. 1990), affd. 501 U.S. 868 (1991); or (2) what advice Parker
rendered with respect to either the profitability of the
transaction or the claiming of tax benefits therefrom, see also
Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165
(1946), affd. 162 F.2d 513 (10th Cir. 1947).
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