- 8 -
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. Id.
The facts pertinent to the instant case relating to the
structure, formation, and operation of Jojoba Hawaii are as
discussed in Utah Jojoba I Research v. Commissioner, supra, with
the exception of a few specific dates and dollar amounts. Jojoba
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