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expenses for food and lodging.5 Petitioners simply assert that
the accuracy-related penalty does not apply because Waterfall
Farms properly claimed the deductions under section 162(a) and
the Hubers properly excluded the payments under section 119. We
have found to the contrary.
Under these circumstances, we are compelled to hold that
Waterfall Farms is liable for the accuracy-related penalty for
the years at issue.
To reflect the foregoing,
Decisions will be
entered for respondent.
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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