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basis, contemplating all the relevant facts and circumstances.
Sec. 1.6664-4(b)(1), Income Tax Regs.
“Reasonable cause requires that the taxpayer exercise
ordinary business care and prudence”. Bitker v. Commissioner,
T.C. Memo. 2003-209 (citing United States v. Boyle, 469 U.S. 241
(1985)). With respect to the tax treatment of an item, the good
faith reliance on the advice of a competent and independent
professional may constitute “reasonable cause”. Id.; sec.
1.6664-4(b), Income Tax Regs. However, whether a taxpayer
reasonably relies on the advice of a professional depends upon
the facts and circumstances of the case and the applicable law.
Sec. 1.6664-4(c)(1)(i), Income Tax Regs. “[T]he ultimate
responsibility for a correct return lies with the taxpayer who
must furnish the necessary information to his agent who prepared
his return.” Pessin v. Commissioner, 59 T.C. 473, 489 (1972);
sec. 1.6664-4(c)(1)(i), Income Tax Regs. The taxpayer “has the
burden of establishing that he at least supplied the correct
information to his accountant * * * and that the incorrect
returns were a result of the accountant’s mistakes.” Pessin v.
Commissioner, supra at 489.
In this case, the understatement and underpayment of tax is
a direct result of the misapplication and mislabeling of
transactions in derogation of the tax laws. Furthermore,
Burton’s failure to keep accurate and complete corporate books
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