Rodney M. Fujiyama and Vicki Ann Fujiyama - Page 12




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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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