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between petitioner and Ammareh were the fair price agreement, it
would have changed his decision to claim the deduction on the
return. Ms. Fong did not recall whether she ever saw the fair
price agreement, but she thought she had seen a note.
Petitioners had been giving different versions about the
ownership of GMS since 1985 when it was first brought to Ms.
Kauls’ attention for the preparation of their 1985 return.
Petitioners told Ms. Kauls that GMS was a corporation and then
retracted that statement and told her it was a partnership in
which Mr. Ammareh owned 10 percent.12 We note that the latter is
contrary to petitioners’ current position. At another time,
petitioners told her that Mrs. Ahadpour owned 20 percent of the
business. It appears that in the end, Ms. Kauls relied on the
Statement of Account and the Khossravi appraisal when she
reported to the IRS that petitioner had sold his business.
Petitioners have failed to establish that they relied
reasonably and in good faith on any advice given by their
preparers. Petitioners have not shown that they acted in good
faith and had reasonable cause with respect to the bad debt. It
is evident that the preparers were aware of the debt only from
the Statement of Account and petitioners’ statements. Lastly, it
is not clear whether petitioners discussed whether the sale of
12 Ms. Kauls left Johnson & Associates in 1988, 2 years
before the 1989 return was filed.
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