William G. and Debra C. Kellen - Page 17




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         investment, and the due care in the claiming of the deduction.”),            
         affg. T.C. Memo. 1994-217; Turner v. Commissioner, T.C. Memo.                
         1995-363.  In this regard, the determination of negligence is                
         highly factual.                                                              
              Under some circumstances, a taxpayer may avoid liability for            
         negligence if reasonable reliance on a competent professional                
         adviser is shown.  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. on another issue 501              
         U.S. 868 (1991).  However, 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 negligence, the taxpayer must show that the professional had            
         the requisite expertise, as well as knowledge of the pertinent               
         facts, to provide informed advice on the subject matter.  See                
         David v. Commissioner, 43 F.3d 788, 789-790 (2d Cir. 1995), affg.            
         T.C. Memo. 1993-621; Goldman v. Commissioner, 39 F.3d 402, 407               
         (2d Cir. 1994), affg. T.C. Memo. 1993-480; Freytag v.                        
         Commissioner, supra.                                                         
              The facts pertinent to the present case relating to the                 
         structure, formation, and operation of San Nicholas are as found             
         above and as discussed in Utah Jojoba I Research v. Commissioner,            
         T.C. Memo. 1998-6.  The offering memorandum identified U.S. Agri             






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