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1. Petitioners’ Purported Reliance on an Adviser
In each of these cases, petitioners claim that they
reasonably relied upon Schluter’s advice. A taxpayer may avoid
liability for the additions to tax under section 6653(a)(1) and
(2) if he or she reasonably relied on competent professional
advice. See United States v. Boyle, 469 U.S. 241, 250-251
(1985); Freytag v. Commissioner, 89 T.C. 849, 888 (1987), affd.
904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991); see
also American Properties, Inc. v. Commissioner, 28 T.C. 1100,
1116-1117 (1957), affd. per curiam 262 F.2d 150 (9th Cir. 1958).
Reliance on professional advice, standing alone, is not an
absolute defense to negligence, but rather a factor to be
considered. See Freytag v. Commissioner, supra. For reliance on
professional advice to excuse a taxpayer from the negligence
additions to tax, the taxpayer must show that the professional
had the expertise and knowledge of the pertinent facts to provide
informed advice on the subject matter. See Chakales v.
Commissioner, 79 F.3d 726 (8th Cir. 1996), affg. T.C. Memo. 1994-
408; David v. Commissioner, 43 F.3d 788, 789-790 (2d Cir. 1995),
affg. T.C. Memo. 1993-621; Freytag v. Commissioner, supra; Sann
v. Commissioner, supra.
Moreover, reliance on representations by insiders,
promoters, or offering materials has been held an inadequate
defense to negligence. See Pasternak v. Commissioner, 990 F.2d
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