Thomas N. Carmena - Page 7




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          Neely v. Commissioner, 85 T.C. 934, 947 (1985); Glassley v.                 
          Commissioner, T.C. Memo. 1996-206.  The focus of inquiry is                 
          on the reasonableness of the taxpayer’s actions in light of his             
          experience and the nature of the investment.  See Henry Schwartz            
          Corp. v. Commissioner, 60 T.C. 728, 740 (1973); Greene v.                   
          Commissioner, T.C. Memo. 1998-101, affd. without published                  
          opinion 187 F.3d 629 (4th Cir. 1999); Glassley v. Commissioner,             
          supra; Turner v. Commissioner, T.C. Memo. 1995-363.  Whether a              
          taxpayer is negligent in claiming a tax deduction "depends upon             
          both the legitimacy of the underlying investment, and due care in           
          the claiming of the deduction."  Sacks v. Commissioner, 82 F.3d.            
          918, 920 (9th Cir. 1996), affg. T.C. Memo. 1994-217; see Greene             
          v. Commissioner, supra.                                                     
               A taxpayer may avoid liability for negligence penalties                
          under some circumstances if the taxpayer reasonably relied on               
          competent professional advice.  See Freytag v. Commissioner, 89             
          T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd.            
          on other issue 501 U.S. 868 (1991).  Such reliance, however, is             
          "not an absolute defense to negligence, but rather a factor to be           
          considered."  Id.  For reliance on professional advice to relieve           
          a taxpayer from the negligence addition to tax, the taxpayer                
          must show that the professional adviser had the expertise and               
          knowledge of the pertinent facts to provide informed advice on              
          the subject matter.  See id.                                                





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