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due on the portion of the underpayment attributable to negligence
or intentional disregard of rules or regulations.
Negligence is defined as “lack of due care or failure to do
what a reasonable and prudent person would do under similar
circumstances.” Anderson v. Commissioner, 62 F.3d 1266, 1271
(10th Cir. 1995), affg. T.C. Memo. 1993-607. Petitioners argue
that Mr. Harvey was not negligent because he relied on the advice
of a professional, Mr. Peterson. Reliance on professional advice
may be a defense to the negligence penalties. See id. The
advice must be from competent and independent parties, not from
the promoters of the investment. See LaVerne v. Commissioner, 94
T.C. 637, 652 (1990), affd. without published opinion sub nom.
Cowles v. Commissioner, 949 F.2d 401 (10th Cir. 1991), affd.
without published opinion 956 F.2d 274 (9th Cir. 1992); Rybak v.
Commissioner, 91 T.C. 524, 565 (1988). We hold that petitioner’s
reliance on any advice2 from Mr. Peterson was not reasonable
because it was not from an independent source. As such, this
reliance cannot be a defense to negligence.
2The advice petitioner received from Mr. Peterson was
apparently only in the context of Mr. Peterson’s preparation of
petitioners’ tax return. Mr. Harvey testified that he never
discussed the tax implications of the investment with Mr.
Peterson.
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