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professional advice concerning tax laws is a defense. See United
States v. Boyle, 469 U.S. 241 (1985); Betson v. Commissioner, 802
F.2d 365, 372 (9th Cir. 1986), affg. in part and revg. in part
T.C. Memo. 1984-264. Reliance on a qualified adviser may
demonstrate reasonable cause and good faith if the evidence shows
that the taxpayer contacted a competent tax adviser and provided
the adviser with all necessary and relevant information. See
Collins v. Commissioner, 857 F.2d 1383, 1386 (9th Cir. 1988),
affg. Dister v. Commissioner, T.C. Memo. 1987-217; Jackson v.
Commissioner, 86 T.C. 492, 539-540 (1986), affd. 864 F.2d 1521
(10th Cir. 1989). In order to prove such reliance, the taxpayer
must establish that the return preparer was supplied with all
necessary information, and the incorrect return was the result of
the preparer’s mistakes. See Weis v. Commissioner, 94 T.C. 473,
487 (1990).
Both Ms. Fong, who prepared petitioners’ 1989 return, and
Mr. Johnson, who signed as the tax preparer, believed that
petitioner was the sole proprietor of GMS. Petitioners told Mr.
Johnson that the period of limitations had run on collectability
of the debt, and they showed him the Statement of Account as
support of the debt. Mr. Johnson relied on this information
provided by petitioners in determining whether petitioners were
entitled to claim the bad debt. Mr. Johnson never saw the fair
price agreement, and he testified that if the real agreement
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