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section 6662(a) accuracy-related penalty, this Court requires
that the taxpayer prove by a preponderance of the evidence that
the adviser was a competent professional who had sufficient
expertise to justify reliance; the taxpayer gave the adviser the
necessary and accurate information; and the taxpayer actually
relied in good faith on the adviser’s judgement. See Neonatology
Associates v. Commissioner, 115 T.C. 43 (2000).
We are not convinced that petitioners reasonably relied on
their return preparer in reporting the items in issue. The
record does not contain evidence of what specific information
Burien Nissan and the Johnstons gave their return preparer.
Indeed, we have found that petitioners mischaracterized the key
transactions in this proceeding, and there is every reason to
believe that they made the same representations to their return
preparer.
Accordingly, we find that petitioners have failed to prove
that any portion of their underpayments was due to reasonable
cause or that substantial authority existed for Burien Nissan’s
and the Johnstons’ various tax positions. We hold that Burien
Nissan and the Johnstons are liable for the accuracy-related
penalties under section 6662(a) and (b)(1) for the years in
issue. Respondent also determined that Burien Nissan and the
Johnstons are liable for the accuracy-related penalty for
substantially underpaying their income tax liability for the
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