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reasonably when he or she arrives at that advice independently,
taking into account, among other things, the taxpayer's
purposes for entering into the underlying transaction. See
sec. 1.6664-4(c)(i), Income Tax Regs.; see also Leonhart v.
Commissioner, 414 F.2d 749 (4th Cir. 1969), affg. T.C. Memo.
1968-98. Reliance may be unreasonable when it is placed upon
insiders, promoters, or their offering materials, or when the
person relied upon has an inherent conflict of interest that
the taxpayer knew or should have known about. See Goldman v.
Commissioner, 39 F.3d 402 (2d Cir. 1994), affg. T.C. Memo.
1993-480; LaVerne v. Commissioner, 94 T.C. 637, 652-653 (1990),
affd. without published opinion 956 F.2d 274 (9th Cir. 1992),
affd. in part without published opinion sub nom. Cowles v.
Commissioner, 949 F.2d 401 (10th Cir. 1991). Reliance also is
unreasonable when the taxpayer knew, or should have known, that
the adviser lacked the requisite expertise to opine on the tax
treatment of the disputed item. See sec. 1.6664-4(c), Income
Tax Regs.
In sum, for a taxpayer to rely reasonably upon advice so
as possibly to negate a section 6662(a) accuracy-related
penalty determined by the Commissioner, the taxpayer must prove
by a preponderance of the evidence that the taxpayer meets each
requirement of the following three-prong test: (1) The adviser
was a competent professional who had sufficient expertise to
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