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Under certain circumstances, a taxpayer may avoid the
accuracy-related penalty for negligence where the taxpayer
reasonably relied on the advice of a competent professional.
Sec. 1.6664-4(b)(1), Income Tax Regs.; see sec. 6664(c); Freytag
v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904 F.2d 1011
(5th Cir. 1990), affd. 501 U.S. 868 (1991). However, reliance on
a professional adviser, standing alone, is not an absolute
defense to negligence; it is only one factor to be considered.
In order for reliance on a professional adviser to relieve a
taxpayer from the negligence penalty, the taxpayer must establish
that the professional adviser on whom he or she relied had the
expertise and knowledge of the relevant facts to provide informed
advice on the subject matter. Freytag v. Commissioner, supra at
888.
Petitioners knew that the amounts of the deductions claimed
on their returns for charitable contributions were considerably
in excess of what they had claimed on prior years' returns and,
therefore, were false. They questioned Mr. Beltran about that at
the time the returns were prepared, and his explanation was that
they were entitled to the deductions claimed based on a "formula"
allowed by the Internal Revenue Service. At trial, petitioners
testified:
MR. PACHECO: * * * Mr. Beltran explained that he knew
the IRS laws and guidelines in and out. He knew exactly
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