- 10 -
(9th Cir. 1991). The taxpayer must advise the preparer of all
facts that are relevant to the tax treatment of an item. See
Ellwest Stereo Theatres, Inc. v. Commissioner, T.C. Memo. 1995-
610. The advice must not be based upon unreasonable factual or
legal assumptions. See id. It does not appear disputed that EBS
suffered losses. The limitations of the deductibility of losses
from an S corporation depend on a taxpayer's bases in the stock
and indebtedness. A taxpayer's bases in an S corporation's stock
and indebtedness is a fairly complicated subject. Under these
circumstances we do not believe that the imposition of the
section 6662(a) penalties is warranted.
Decision will be entered
for respondent with respect to the
deficiencies and addition to tax
under section 6651(a)(1) and for
petitioners with respect to the
penalties under section 6662(a).
Page: Previous 1 2 3 4 5 6 7 8 9 10
Last modified: May 25, 2011