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adviser does not necessarily demonstrate reasonable cause unless
the reliance was reasonable and the taxpayer acted in good faith,
which requires, among other things, that the advice be based on
all pertinent facts and circumstances and on no unreasonable
factual or legal assumptions. See sec. 1.6664-4(b)(1) and (c),
Income Tax Regs. If the taxpayer fails to provide the accountant
with the information necessary for preparing the return, the
taxpayer is liable for the penalty. See Johnson v. Commissioner,
74 T.C. 89, 97 (1980), affd. 673 F.2d 262 (9th Cir. 1982).
Petitioners failed to prove that they provided their
accountant complete information for preparing their 1993 joint
Federal income tax return. In addition, petitioners failed to
show that they kept adequate books and records to substantiate
their claimed net operating loss deduction. With regard to both
the discharge of indebtedness income and the claimed net
operating loss deduction, petitioners failed to show that they
had reasonable cause or acted in good faith.
Accordingly, respondent’s determination of an accuracy-
related penalty under section 6662(a) is sustained.
Decision will be entered
for respondent.
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