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Neely v. Commissioner, 85 T.C. 934, 947 (1985). The focus of
inquiry is the reasonableness of the taxpayer’s actions in light
of the taxpayer’s experience and the nature of the investment.
See Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 740
(1973); see also Sacks v. Commissioner, 82 F.3d 918, 920 (9th
Cir. 1996) (whether a taxpayer is negligent in claiming a tax
deduction “depends upon both the legitimacy of the underlying
investment, and the due care in the claiming of the deduction”),
affg. T.C. Memo. 1994-217; Turner v. Commissioner, T.C. Memo.
1995-363. In this regard, the determination of negligence is
highly factual.
Under some circumstances, a taxpayer may avoid liability for
negligence if reasonable reliance on a competent professional
adviser is shown. See United States v. Boyle, 469 U.S. 241, 250-
251 (1985); Freytag v. Commissioner, 89 T.C. 849, 888 (1987),
affd. 904 F.2d 1011 (5th Cir. 1990), affd. on another issue 501
U.S. 868 (1991). However, reliance on professional advice,
standing alone, is not an absolute defense to negligence, but
rather a factor to be considered. See Freytag v. Commissioner,
supra. For reliance on professional advice to excuse a taxpayer
from negligence, the taxpayer must show that the professional had
the requisite expertise, as well as knowledge of the pertinent
facts, to provide informed advice on the subject matter. See
David v. Commissioner, 43 F.3d 788, 789-790 (2d Cir. 1995), affg.
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