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Although Olbres identified a few services performed for
petitioner by Coupounas, none of these services were specialized,
unique, or otherwise reasonably valued at $65,000 during 1994.
Her testimony does not support a finding that an expense in any
amount was incurred during petitioner’s 1994 tax year that would
support a deduction by an accrual basis taxpayer. See sec.
461(a); sec. 1.461-1(a)(2)(i), Income Tax Regs.
Olbres’ testimony concerning her unquestioning reliance on
Coupounas is either improbable or indicative of unreasonable
conduct. Her testimony that she did not look at anything other
than the bottom line on the tax return that she signed is also
improbable or indicative of negligence. According to the return,
the professional fees claimed during the year in issue exceeded
150 percent of the compensation that she received as the
executive and operating employee of the corporation. Although
Coupounas was an accountant and an attorney, under the facts of
this case we do not believe that Olbres reasonably relied on him
with respect to the propriety of deducting $65,000 in accrued
professional fees that were allegedly payable to Coupounas.
Under these circumstances, a penalty for negligence under section
6662(a) is appropriate.
Decision will be entered
for respondent.
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