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not automatically a defense to negligence, but it is one factor
to be considered. See Freytag v. Commissioner, 904 F.2d 1011
(5th Cir. 1990), affd. 501 U.S. 868 (1991). It must be
established that the reliance was reasonable, in good faith, and
based upon full disclosure. Ewing v. Commissioner, 91 T.C. 396,
423-424 (1988), affd. without published opinion 940 F.2d 1534
(9th Cir. 1991); Metra Chem
Corp. v. Commissioner, 88 T.C. 654, 662 (1987); Pritchett v.
Commissioner, 63 T.C. 149, 175-176 (1974).
In his defense, petitioner claims that he did not have a
great deal of time to file the 1991 return by April 1994. This
was due to respondent’s examination that followed petitioner’s
plea of guilty to Medicaid fraud. Petitioner hired an accountant
who reconstructed petitioner’s records because adequate records
had not been maintained for his taxi-leasing business and
Medicaid activities. Petitioner’s accountant reconstructed
petitioner’s tax reporting position from the records available
and from information provided by petitioner.
With respect to the income side of petitioner’s 1991
reporting, respondent made no adjustments with the exception of
$1,313 of interest income. With respect to petitioner’s
deductions, however, respondent disallowed a claimed $1,490 loss
from the sale or involuntary conversion of a taxi. Respondent,
in the notice of deficiency, allowed $112,023 of the $254,787
petitioner claimed as business deductions. During pretrial
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