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Sec. 1.6664-4(b)(1), Income Tax Regs.; see sec. 6664(c); Freytag
v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011
(5th Cir. 1990), affd. 501 U.S. 868 (1991). However, reliance on
a professional adviser, standing alone, is not an absolute
defense to negligence; it is only one factor to be considered.
In order for reliance on a professional adviser to relieve a
taxpayer from the negligence penalty, the taxpayer must establish
that the professional adviser on whom he or she relied had the
expertise and knowledge of the relevant facts to provide informed
advice on the subject matter. Freytag v. Commissioner, supra at
888.
Petitioners made no effort to ascertain the professional
background and qualifications of their return preparer. They
knew that the items at issue were false and expressed their
reservations to Mr. Beltran. The answers he gave them should
have raised other questions. Petitioners clearly did not make a
reasonable effort to determine whether the representations of Mr.
Beltran were correct. They did not consult other tax
professionals to verify the accuracy of the returns prepared by
Mr. Beltran or the representations he made to them regarding
their deductions. The Court is satisfied from the record that
Mr. Beltran knew, or had reason to know, all the relevant facts
upon which, had he been a qualified professional, he could have
accurately advised petitioners on the amount of their allowable
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