Norman H. Fawson and Mary Jane B. Fawson - Page 7

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          918, 920 (9th Cir. 1996), affg. T.C. Memo. 1994-217; see Greene             
          v. Commissioner, supra.                                                     
               A taxpayer may avoid liability for negligence penalties                
          under some circumstances if the taxpayer reasonably relied on               
          competent professional advice.  See Freytag v. Commissioner, 89             
          T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd.            
          on other issue 501 U.S. 868 (1991).  Such reliance, however, is             
          “not an absolute defense to negligence, but rather a factor to be           
          considered.”  Id.  For reliance on professional advice to excuse            
          a taxpayer from the negligence additions to tax, the taxpayer               
          must show that the professional adviser had the expertise and               
          knowledge of the pertinent facts to provide informed advice on              
          the subject matter.  See id.                                                
               The record does not establish the exact nature of the                  
          underlying partnership investment in this case.  No prospectus or           
          private placement memorandum was produced, few facts on the exact           
          nature of the investment were stipulated, and no witnesses other            
          than petitioner testified at trial.  Nevertheless, a fair reading           
          of the stipulation of facts and the briefs of the parties shows             
          that they agree that the underlying facts of the partnership                
          operations are as discussed in Utah Jojoba I Research v.                    

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