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the due care that a reasonable and ordinarily prudent person
would exercise under like circumstances. Neely v. Commissioner,
85 T.C. 934, 947 (1985). The focus of our inquiry is on the
reasonableness of the taxpayer's actions in light of his
experience and the nature of the investment. Henry Schwartz
Corp. v. Commissioner, 60 T.C. 728, 740 (1973); Fawson v.
Commissioner, T.C. Memo. 2000-195. 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.
Under some circumstances, a taxpayer may avoid liability for
negligence penalties if the taxpayer reasonably relied on
competent professional advice. 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). However, such reliance is "not
an absolute defense to negligence, but rather a factor to be
considered." Id. To be able to rely on professional advice as
an excuse from the negligence additions 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.
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