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be assumed to pay $60,000 in capital gains taxes on the sale of
the Happy Valley property to a third party and that the credit
received by Mr. Walker against his debt to her by reason of the
transfer would be reduced proportionately.
The compelling facts again are that petitioner had been
advised of the tax consequences of the transactions involving the
Happy Valley property before she entered into them. She should
have provided Coburn with the Settlement Agreement and quitclaim
deed so that he could determine the proper tax treatment of
Mr. Walker’s transfer of his 25-percent interest in the Happy
Valley property to her. Because petitioner failed to provide
this information to Coburn and subsequently denied to him that
the transaction occurred, we conclude that petitioner’s efforts
to assess her proper tax liability were neither consistent with
reasonable cause nor in good faith. See Weis v. Commissioner, 94
T.C. 473, 487 (1990); Pessin v. Commissioner, 59 T.C. 473, 489
(1972); Estate of Ballantyne v. Commissioner, supra; sec. 1.6664-
4(c)(1)(i), Income Tax Regs.; see also Nowak v. Commissioner,
T.C. Memo. 1994-428 (upholding imposition of negligence penalty
where taxpayers ignored competent tax advice given to them by
their accountant about proposed transaction).
Conclusion
We hold that respondent did not err in his determination
that petitioner failed to report the correct amount of gain from
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