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Despite the fact that petitioners have the burden of proof,
see supra note 3, petitioners have made no showing that they made
an attempt to comply with the tax rules and regulations with
regard to those deductions taken by Wolf Creek Farm for the years
at issue which have been disallowed. Hence, with respect to
those deductions, petitioners have failed to show that Wolf Creek
Farm was not negligent. Nor have petitioners showed that they
acted in good faith with respect to, or that there was reasonable
cause for, the position they took.
Further, petitioners do not claim that they relied on Mr.
Bleeker or any other professional as to the tax treatment of the
expenses for food and lodging.5 Petitioners simply assert that
the accuracy-related penalty does not apply because Wolf Creek
Farm properly claimed the deductions under section 162(a) and Mr.
Tschetter properly excluded the payments under section 119. We
have found to the contrary.
5Before the trial in these cases, respondent filed a motion
to disqualify Mr. Bleeker from his representation of petitioners.
Respondent’s motion was based, in part, on the premise that, if
petitioners contend that they reasonably relied on Mr. Bleeker’s
advice with respect to the proper tax treatment of the payments
at issue, then Mr. Bleeker would be required to testify as a
witness in the trial of these cases. The Court held a telephone
conference call with Mr. Bleeker and counsel for respondent to
discuss respondent’s motion. During that call, Mr. Bleeker
informed the Court that petitioners did not intend to raise
reasonable reliance on a tax professional as a defense to the
accuracy-related penalties.
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