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Collins to enable him to do so. We find that petitioners’
reliance upon Mr. Collins, who characterized the costs incurred
for 1990 through 1993 in renovating 5401-9 S. Broadway as
Schedule C deductions, was reasonable. We hold that petitioners
are not liable for section 6662(a) accuracy-related penalties for
1992 and 1993 with respect to that part of the underpayments
attributable to the deduction of these costs as Schedule C
expenses. See Test v. Commissioner, T.C. Memo. 2000-362; Koenig
v. Commissioner, T.C. Memo. 1998-215, affd. without published
opinion 221 F.3d 1348 (9th Cir. 2000).
Similarly, in computing petitioners’ NOL carryover from
1990, Mr. Collins misapplied and misinterpreted section 172(b).
Mr. Collins carried forward the entire 1990 NOL, without having
petitioners elect to relinquish the carryback period, because he
misunderstood the NOL carryback rules. Cf. sec. 172(b)(3)(C);
Young v. Commissioner, 83 T.C. 831, 840-842 (1984) (holding
taxpayer failed to make a timely election to relinquish the 3-
year carryback period), affd. 783 F.2d 1201, 1204-1207 (5th Cir.
1986); Diesel Performance, Inc. v. Commissioner, T.C. Memo. 1999-
302 (same), affd. 16 Fed. Appx. 718 (9th Cir. 2001). Petitioners
clearly relied upon Mr. Collins to compute properly their NOL
carryover from 1990. We find that petitioners’ reliance on Mr.
Collins was reasonable, and we hold that petitioners are not
liable for a section 6662(a) accuracy-related penalty for 1992
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