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the 1996 and 1997 taxable years. Respondent determined
understatements of tax of $10,565 and $18,226 for the 1996 and
1997 taxable years, respectively.
No penalty shall be imposed, however, for either
negligence or intentional disregard of rules or regulations or
a substantial understatement of income tax to the extent that
the taxpayer shows that the underpayment is due to the
taxpayer's reasonable cause and good faith. See sec. 6664(c);
secs. 1.6662-3(a), 1.6664-4(a), Income Tax Regs.
Reasonable cause requires that the taxpayer have exercised
ordinary business care and prudence as to the disputed item.
See United States v. Boyle, 469 U.S. 241 (1985); see also
Estate of Young v. Commissioner, 110 T.C. 297, 317 (1998). The
good faith, reasonable reliance on the advice of an
independent, competent professional as to the tax treatment of
an item may meet this requirement. See United States v. Boyle,
supra; sec. 1.6664-4(b), Income Tax Regs.; see also Ewing v.
Commissioner, 91 T.C. 396, 423 (1988), affd. without published
opinion 940 F.2d 1534 (9th Cir. 1991).
Whether a taxpayer relies on advice and whether such
reliance is reasonable hinge on the facts and circumstances of
the case and the law that applies to those facts and
circumstances. See sec. 1.6664-4(c)(i), Income Tax Regs. A
professional may render advice that may be relied upon
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