- 17 -
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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