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See Jaques v. Commissioner, T.C. Memo. 1989-673, affd. 935 F.2d
104 (6th Cir. 1991); see also United States v. Boyle, supra at
251. “Ordinary business care and prudence” do not demand that
taxpayers attempt to discern error in the substantive advice of
an accountant or attorney. Id. Taxpayers must be able to show
that the adviser reached his or her decisions independently. See
Leonhart v. Commissioner, 414 F.2d 749, 750 (4th Cir. 1969),
affg. T.C. Memo. 1968-98. In the instant case, Mr. Hathaway is a
C.P.A. and an attorney certified in taxation law by the
California State Bar, Board of Legal Certification.
Additionally, petitioner and petitioner’s father fully disclosed
the facts surrounding the transaction to Mr. Hathaway and
provided him the $30,000 check petitioner had issued to his
father for consulting services. Based on this information, Mr.
Hathaway advised both petitioner and petitioner’s father that the
appropriate income tax reporting was for petitioner’s father to
report the $30,000 payment as compensation income and for
petitioner to claim a $30,000 deduction. Mr. Hathaway prepared
the returns for both petitioner and petitioner’s father
consistent with this advice. Both petitioner and petitioner’s
father reasonably relied on the advice of their tax adviser in
reporting the transaction on their respective returns.
Accordingly, petitioner is not liable for the section 6662(a)
accuracy-related penalty.
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