J. Clark and Mary R. Bundren - Page 12




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               No penalty shall be imposed under section 6662(a) with                 
          respect to any portion of an underpayment if it is shown that               
          there was reasonable cause and that the taxpayer acted in good              
          faith.  See sec. 6664(c).  Whether a taxpayer acted with good               
          faith depends upon the facts and circumstances of each case.  See           
          sec. 1.6664-4(b)(1), Income Tax Regs.  Reliance on the advice of            
          a professional tax adviser constitutes reasonable cause and is in           
          good faith if, under all the circumstances, the reliance was                
          reasonable and the taxpayer acted in good faith.  See id.                   
          Reliance on a tax adviser or return preparer may be reasonable              
          and in good faith if the taxpayer establishes:  (1) The adviser             
          or return preparer had sufficient expertise to justify reliance;            
          (2) the taxpayer provided necessary and accurate information; and           
          (3) the taxpayer actually relied in good faith on the adviser’s             
          or return preparer’s judgment.  See, e.g., Sather v.                        
          Commissioner, T.C. Memo. 1999-309; Ellwest Stereo Theatres of               
          Memphis, Inc. v. Commissioner, T.C. Memo. 1995-610, and cases               
          cited therein.                                                              
               From 1982 through the years in issue, petitioners relied on            
          the accounting services of Walters, who has been a certified                
          public accountant since 1977.  Petitioners retained Walters to              
          prepare both their individual tax returns and tax returns for               
          their several business entities.  Walters’ experience and                   
          qualifications were sufficient to warrant reliance upon his                 






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