- 22 -
251 (1985); Freytag v. Commissioner, 89 T.C. 849, 888 (1987),
affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991).
Reliance on professional advice, standing alone, is not an
absolute defense to negligence but rather a factor to be
considered. Freytag v. Commissioner, supra. For reliance on
professional advice to excuse a taxpayer from the negligence
additions to tax, the taxpayer must show that the professional
had the expertise and knowledge of the pertinent facts to provide
informed advice on the subject matter. David v. Commissioner, 43
F.3d 788, 789-790 (2d Cir. 1995), affg. T.C. Memo. 1993-621;
Goldman v. Commissioner, supra at 408; see Freytag v.
Commissioner, supra; Sann v. Commissioner, T.C. Memo. 1997-259.
Reliance on representations by insiders, promoters, or
offering materials has been held an inadequate defense to
negligence. Goldman v. Commissioner, supra; Sann v.
Commissioner, supra; see Berry v. Commissioner, T.C. Memo. 2001-
311; Carroll v. Commissioner, T.C. Memo. 2000-184. Pleas of
reliance have been rejected when neither the taxpayer nor the
advisers purportedly relied upon by the taxpayer knew anything
about the nontax business aspects of the contemplated venture.
See David v. Commissioner, supra; Goldman v. Commissioner, supra.
Petitioner primarily contends that he was not negligent
because he reasonably relied on the memorandum, the supporting
documents to the memorandum, and his advisers. Petitioner had no
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