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one who decided to place the $499.98 on Schedule E. Furthermore,
Mr. Turner testified and a letter dated April 30, 1997, from Mr.
Strand confirmed that petitioners deducted the loss on the sale
of the Belair property on their 1994 tax return based on Mr.
Strand’s advice that petitioners had converted the Belair
property to business property and the loss on the sale was a
business loss.
We think the foregoing circumstances meet the standard
established in United States v. Boyle, supra at 251, where the
Supreme Court stated: “When an accountant or attorney advises a
taxpayer on a matter of tax law, such as whether a liability
exists, it is reasonable for the taxpayer to rely on that
advice.” We conclude that petitioners made a reasonable effort
to obtain advice with respect to the tax treatment of their sale
of the Belair property, and therefore they are not liable for the
section 6662(a) penalty.
To reflect the foregoing,
Decision will be entered
for respondent as to the
deficiency and the addition
to tax pursuant to section
6651(a)(1), and for
petitioners as to the penalty
pursuant to section 6662.
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