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professional tax adviser. See sec. 1.6664-4(b)(1), Income Tax
Regs.
The Muhichs seek relief from the penalty by arguing they
relied in good faith on advice from the Martins and Bartoli.
Good faith reliance on the advice of counsel or a qualified
accountant can, in certain circumstances, be a defense to the
accuracy-related penalty for negligence. See, e.g., Ewing v.
Commissioner, 91 T.C. 396, 423-424 (1988), affd. without
published opinion 940 F.2d 1534 (9th Cir. 1991); Jackson v.
Commissioner, 86 T.C. 492, 539-540 (1986), affd. 864 F.2d 1521
(10th Cir. 1989); Pessin v. Commissioner, 59 T.C. 473, 489
(1972); Conlorez Corp. v. Commissioner, 51 T.C. 467, 475 (1968).
In those cases, the taxpayer must establish: (1) The adviser had
sufficient expertise to justify reliance, (2) the taxpayer
provided necessary and accurate information to the adviser, and
(3) the taxpayer actually relied in good faith on the adviser’s
judgment. See Ellwest Stereo Theatres of Memphis, Inc. v.
Commissioner, T.C. Memo. 1995-610.
The record in this case demonstrates the Muhichs did not act
reasonably with respect to reporting their income for 1994 and
1995. The Muhichs' claim that they relied in good faith on the
Martins for advice as to the tax treatment of the trust scheme is
unsupported by the evidence. The Muhichs failed to disclose to
the Martins they had purportedly divested themselves of most of
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