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It is equally well settled that, although a taxpayer may
avoid liability for the addition to tax under section 6653(a)(2)
if he reasonably relies in good faith on a competent
professional, United States v. Boyle, supra, “Reliance on
professional advice, standing alone, is not an absolute defense
to negligence, but rather a factor to be considered”, Freytag v.
Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th
Cir. 1990), affd. 501 U.S. 868 (1991). In order to successfully
claim he reasonably relied on professional advice, petitioner
must demonstrate that the professional on whom he relied had
sufficient expertise and knowledge of the pertinent facts to
provide informed advice on the subject matter. Id.; Becker v.
Commissioner, supra; Sacks v. Commissioner, T.C. Memo. 1994-217,
affd. 82 F.3d 918 (9th Cir. 1996); Kozlowski v. Commissioner,
T.C. Memo. 1993-430, affd. without published opinion 70 F.3d 1279
(9th Cir. 1995). Petitioner has not demonstrated that Mr. Mihara
had either the necessary expertise or the knowledge of pertinent
facts to render informed advice on the investment. To the
7(...continued)
as indicating the deduction would be proper. Likewise, the
Caplan letter stated that the deduction might be subject to
attack by the IRS and that “Several commentators have discussed
the potential that the IRS may attack a research and development
partnership on the basis that it constitutes a material
distortion of income.” The Caplan letter also pointed out the
lack of judicial opinions and legislative enactments regarding
sec. 174 and stressed “it is not possible to guarantee the
deductibility of certain expenditures as research and development
expenses.”
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