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For the years in issue, petitioners must show that they
acted reasonably and prudently and exercised due care in
reporting their taxes. See id. Petitioners assert that their
actions were not negligent, and, therefore, they are not liable
for additions to tax or penalties. They argue that they relied
on the advice of a certified public accountant in calculating
their tax liability during all years.
Taxpayers may satisfy their burden of proof as to negligence
by showing that they reasonably relied on the advice of a
competent professional adviser. See United States v. Boyle,
supra at 250-251; Freytag v. Commissioner, 89 T.C. 849, 888
(1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 869
(1991). Reliance on professional advice, standing alone, is not
an absolute defense but rather is a factor to be considered.
Although any reliance by petitioners on the advice of their
paid preparer was unreasonable with respect to the failure to
file a timely return, it was reasonable to rely on the advice of
the paid preparer regarding the amount of tax liability to report
during the years in issue. The facts of this case created
genuine issues as to whether petitioners are entitled to use NOL
carryovers on their returns for 1985 through 1993. Due to the
complexity of the bankruptcy issues involved, it was reasonable
for petitioners to rely upon the incorrect advice of their paid
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