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good faith, reasonable reliance on the advice of an independent,
competent professional as to the tax treatment of an item may
meet this requirement. United States v. Boyle, supra; sec.
1.6664-4(b), Income Tax Regs. Whether a taxpayer relies on
advice and whether such reliance is reasonable hinge on the facts
and circumstances of the case and the law applicable thereto.
Sec. 1.6664-4(c)(1)(i), Income Tax Regs. The taxpayer must prove
that: (1) The adviser was a competent professional who had
sufficient expertise to justify reliance, (2) the taxpayer
provided necessary and accurate information to the adviser, and
(3) the taxpayer actually relied in good faith on the adviser’s
judgment. Ellwest Stereo Theatres, Inc. v. Commissioner, T.C.
Memo. 1995-610; see also Rule 142(a)(1).
We are unable to conclude that petitioners have met that
burden of proof. Whereas they assert on brief that they relied
reasonably upon their accountant, we do not find that such was
the case. Petitioners had actively traded securities for several
years preceding the subject years and reported capital gains from
securities transactions in 1991 and 1992, including a net capital
gain of over $600,000 in 1992. Although neither the law nor the
nature of their securities activity changed materially in the
following 2 years, their reporting position as to that activity
changed from capital loss to ordinary loss treatment. The record
is barren of any credible evidence showing that petitioners ever
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