- 50 -
by-case basis, taking into account all pertinent facts
and circumstances. * * * Generally, the most important
factor is the extent of the taxpayer’s effort to assess
the taxpayer’s proper tax liability. * * * [Sec.
1.6664-4(b)(1), Income Tax. Regs.]
Furthermore, reliance upon the advice of an expert tax
preparer may, but does not necessarily, demonstrate reasonable
cause and good faith in the context of the section 6662(a)
penalty. See id.; see also Freytag v. Commissioner, supra at
888. Such reliance is not an absolute defense, but it is a
factor to be considered. See Freytag v. Commissioner, supra at
888. In order for this factor to be given dispositive weight,
the taxpayer claiming reliance on a professional such as an
accountant must show, at minimum, that (1) the accountant was
supplied with correct information and (2) the incorrect return
was a result of the accountant’s error. See, e.g., Westbrook v.
Commissioner, 68 F.3d 868, 881 (5th Cir. 1995), affg. T.C. Memo.
1993-634; Cramer v. Commissioner, 101 T.C. 225, 251 (1993), affd.
64 F.3d 1406 (9th Cir. 1995); Ma-Tran Corp. v. Commissioner, 70
T.C. 158, 173 (1978); Pessin v. Commissioner, 59 T.C. 473, 489
(1972); Garcia v. Commissioner, T.C. Memo. 1998-203, affd. 190
F.3d 538 (5th Cir. 1999).
As a threshold matter, we first address the situation of
DPC. Due to our determination above that the payments to DPP are
not to be allocated as income to DPC, there exists no
Page: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 NextLast modified: May 25, 2011