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but rather a factor to be considered. See Freytag v.
Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th
Cir. 1990), affd. 501 U.S. 868 (1991). It must be established
that the reliance was reasonable, in good faith, and based upon
full disclosure. See Ewing v. Commissioner, supra; Pritchett v.
Commissioner, 63 T.C. 149, 174-175 (1974).
Petitioners failed to establish that they reasonably relied
in good faith upon Price Waterhouse’s advice. Further,
petitioners did not prove that they fully disclosed the facts of
the expenses at issue. Petitioner repeatedly testified that
Price Waterhouse would not have reported the various expenses on
Schedules A and C unless petitioners were entitled to deduct
them. Petitioner’s testimony is insufficient to establish a
defense to the accuracy-related penalty.
Petitioners claimed deductions that they failed to explain
or substantiate. On the basis of the entire record, we conclude
petitioners have not established that any portion of the
underpayment was due to reasonable cause or that they acted in
good faith. Accordingly, we hold petitioners are liable for the
accuracy-related penalty.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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