- 33 -
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.13 Petitioners simply assert that
the accuracy-related penalty does not apply because Dreyer Farms
properly claimed the deductions under section 162(a) and the
Weeldreyers properly excluded the payments under section 119. We
have found to the contrary.
Under these circumstances, we are compelled to hold that
Dreyer Farms is liable for the accuracy-related penalty for the
years at issue.
To reflect the foregoing,
Decisions will be
entered under Rule 155.
13Before 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.
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Last modified: May 25, 2011