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reliance on a return preparer is not a defense to negligence, and
taxpayers retain a duty to file an accurate return and generally
are required to review their return before signing it. E.g.,
Metra Chem Corp. v. Commissioner, 88 T.C. 654, 662 (1987).
However, in this case and with respect to these two items on
petitioner’s tax returns, petitioner’s reliance was reasonable.
Petitioner provided his return preparer with his business
records, and the preparer computed the amounts of the deductions.
Petitioner was reasonable in not questioning the preparer’s
classification of some meal and entertainment expenses as
“business promotion” expenses; because of the location of these
expenses on the return, the 50 percent limitation was not
obviously applicable. Petitioner was also reasonable in not
questioning the preparer’s classification of the various tax
expenses as deductible: Requiring petitioner to question and
research the deductibility of each individual item would render
his use of a preparer pointless. The record does not support
respondent’s determination of negligence in this case.
To reflect the foregoing,
Decision will be entered
for respondent with respect to the
deficiencies and for petitioner
with respect to the penalties.
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Last modified: May 25, 2011