Frank and Virginia Muhich - Page 27

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          their assets and adopted the trust scheme.  The Martins never               
          advised the Muhichs about the scheme before the Muhichs entered             
          into it.  The Muhichs had all the trusts' returns for the year of           
          inception (1994) prepared by Savino in an attempt to keep the               
          existence of the trusts from the Martins.  Although the Martins             
          did prepare the 1995 returns for the trusts, they did so                    
          reluctantly and only after informing petitioner of their concern            
          as to the trusts' legitimacy.                                               
               Nor are we persuaded that the Muhichs reasonably relied upon           
          a qualified expert in the form of Bartoli.  Bartoli's bias was              
          obvious, and his ability to benefit financially by luring                   
          individuals into the scheme should have sent up a red flag.                 
          Petitioner is an experienced businessman who should have been               
          suspicious of Bartoli's claims.  Further, the record contains no            
          evidence as to Bartoli's qualifications or expertise; he was                
          noticeably absent from the trial, and petitioner was unable to              
          locate him.  The only information the Muhichs provided Bartoli              
          was a list of assets and a questionnaire wherein they documented            
          their desire to avoid taxes.  We hold the Muhichs are liable for            
          the accuracy-related penalties for negligence as determined by              
               Respondent determined that Midwest is liable for the                   
          accuracy-related penalty under section 6662(a) and (b)(2) for all           

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