- 14 -
opinion Osterhout v. Commissioner, T.C. Memo. 1993-251. In that
case, the court found that it was reasonable for the taxpayers to
have relied upon a tax opinion contained in a placement
memorandum, stating: “Absent some evidence that would tell a
prospective investor that the opinion of a reputable CPA or law
firm should be suspect, we find such reliance to be reasonable
under the circumstances.” Id. Because petitioners’ purported
reliance does not even rest upon an expressed opinion concerning
a critical issue, Balboa Energy Fund 1981 is inapposite to the
present case. Furthermore, considering petitioner’s extensive
experience and the numerous statements found in the private
placement memorandum advising petitioners to consult outside
counsel, any reliance by petitioners on the opinion letter would
nevertheless have been unreasonable under the circumstances of
this case.
We sustain respondent’s determination that petitioners are
liable for the section 6653(a)(1) and (2) additions to tax for
negligence.
Substantial Understatement
As a preliminary matter, petitioners argue that respondent’s
assertion of the substantial understatement addition to tax is
not timely. However, the parties agree--and the record supports
the finding--that the notice of deficiency was issued prior to
the running of the applicable period of limitations. See sec.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011