- 20 - losses of $66,121 from a stock car activity that from all indications was predominantly for Tony’s pleasure and recreation. Petitioners contend that no penalty should apply because they relied upon Hayes to draft their 1992 Federal income tax return. Petitioners failed to prove that they provided Hayes with complete information for preparing their 1992 return. In a letter to Tony dated March 7, 1994, Hayes noted that all information used to prepare the return came from either Tony or one of Tony’s agents. Although Tony received monthly, quarterly, and annual statements reflecting the balance on his CRC shareholder account, there is no evidence that petitioners shared the information contained in these statements with Hayes. In his March 7, 1994, letter, Hayes also stated that the reported loss relating to Tony’s stock car activity “is large and will probably be subject to audit. It was reported on your return upon your assurance that the racing venture was entered into with the purpose of obtaining a profit”. From this disclaimer, it appears that Hayes was relying on petitioners’ judgment, rather than the other way around. Petitioners have not established that they acted in good faith and had reasonable cause in understating their capital gains from the CRC stock redemption or in claiming the losses relating to the stock car activity. We sustain respondent’s determination on this issue.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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